Recession warning for Australia with big banks all predicting February interest ... trends now
Australia could sink into recession if the Reserve Bank raises interest rates even just one more time, an economist warns.
The Big Four banks are all expecting an interest rate rise on February 7 that would take the cash rate to a new 10-year high of 3.35 per cent - marking the ninth consecutive increase.
Deloitte Access Economics partner Stephen Smith, an economist, said even one more rate rise in 2023 could push Australia into a recession.
Australia could sink into recession if the Reserve Bank raises interest rates even just one more time, Deloitte Access Economics partner Stephen Smith, an economist has warned (pictured is a Melbourne auction in 2022)
'In our view, any further increases in the cash rate beyond the current 3.1 per cent could unnecessarily tip Australia into recession in 2023,' Mr Smith said.
'On the Reserve Bank's own figuring, mortgage repayments, including principal and interest, are already on track to rise to a record high as a share of household disposable income over coming months.'
Credit ratings agency Moody's Analytics says there is a one-in-three chance of a recession occurring in Australia during the coming year, compared to a 66 to 100 per cent chance in New Zealand.
The Commonwealth Bank, Westpac, ANZ and NAB are each expecting a quarter of a percentage point rate rise next month, following last Wednesday release of official inflation data for the December quarter.
Under this scenario, a borrower with an average $600,000 mortgage would see their monthly repayments rise by $93 to $3,303, up from $3,210.
A couple in Sydney with a $1million home loan would see their repayments surge by $154 to $5,504 from $5,350.
Both increases are based on a Commonwealth Bank variable rising to 5.22 per cent from 4.97 per cent, to reflect the RBA cash rate climbing to 3.35 per cent from 3.1 per cent.
Mr Smith said the Reserve Bank should keep interest rates on hold, even though inflation is now well above its longstanding 2 to 3 per cent target.
'There is an Everest of evidence to suggest interest rates should stay on hold from here,' he said.
Inflation in the year to September surged by 7.3 per
