Monday 27 June 2022 12:51 AM Reserve Bank of Australia governor Philip Lowe tells Zürich panel inflation ... trends now

Monday 27 June 2022 12:51 AM Reserve Bank of Australia governor Philip Lowe tells Zürich panel inflation ... trends now
Monday 27 June 2022 12:51 AM Reserve Bank of Australia governor Philip Lowe tells Zürich panel inflation ... trends now

Monday 27 June 2022 12:51 AM Reserve Bank of Australia governor Philip Lowe tells Zürich panel inflation ... trends now

Australia's most powerful banker has hinted interest rates will rise sharply in coming months but won't go as high as financial markets are expecting.

Reserve Bank of Australia governor Philip Lowe told a Friday night inflation discussion in Zurich, moderated by Swiss bank UBS, that while inflation was likely to keep climbing, it would start moderating in 2023 as Covid and computer chip supply constraints were resolved.

'We have reasonable confidence that inflation will start trending lower next year,' he said.

'The problems in the global economy from Covid are gradually being resolved.

'That's not to say we mightn't get hit by another shock.'

Reserve Bank of Australia governor Philip Lowe told a Friday night inflation discussion in Zurich, moderated by Swiss bank UBS, that while inflation was likely to keep climbing, it would start moderating in 2023 as Covid and computer chip supply constraints were resolved

Reserve Bank of Australia governor Philip Lowe told a Friday night inflation discussion in Zurich, moderated by Swiss bank UBS, that while inflation was likely to keep climbing, it would start moderating in 2023 as Covid and computer chip supply constraints were resolved

The Commonwealth Bank and Westpac are both expecting the RBA to raise the cash rate by another 0.5 percentage points in July - to 1.35 per cent from 0.85 per cent.

New Commonwealth Bank forecasts on RBA cash rate

JULY: Up 0.5 percentage points to 1.35 per cent

AUGUST: Up 0.25 percentage points to 1.6 per cent

SEPTEMBER: Up 0.25 percentage points to 1.85 per cent

NOVEMBER: Up 0.25 percentage points to 2.1 per cent

Advertisement

A half a percentage point increase next Tuesday would see a borrower with an average, $600,000 home loan pay another $165 a month on their mortgage repayments, as their variable rate rose to 3.54 per cent from 3.04 per cent.

Westpac is expecting the cash rate to hit 2.35 per cent by February next year but financial markets are even more worried, forecasting a 3.1 per cent cash rate by Christmas.

The RBA's 0.5 percentage point increase in June was the biggest monthly increase since February 2000.

This took the cash rate to 0.85 per cent - the highest since October 2019 before the pandemic. 

This followed the May rise of 0.25 percentage points which was the first increase since November 2010 - ending the era of the record-low 0.1 per cent cash rate.

Dr Lowe this month suggested inflation was likely to hit seven per cent by the end of 2022, reaching a level last seen in 1990. 

The RBA chief told the Zurich panel discussion inflation was likely to keep rising from its present level of 5.1 per cent - itself the highest since 2001 - as the temporary, six-month halving of fuel excise to 22.1 cents a litre

read more from dailymail.....

PREV Israeli ex-minister sentenced for ‘pressuring’ employees over Malka Leifer case mogaznewsen
NEXT Tuesday 9 August 2022 07:43 AM Melbourne couple mocked for 'impulse buying' a $1.5 million dollar home trends now