The Reserve Bank is expected to lift interest rates to 0.25 per cent at its next meeting. But economists and markets say the rises won’t stop there.
while underlying inflation – closely watched by the Reserve Bank – hit 3.7 per cent, its highest level since 2009. A record 70 of the 87 separate expenditure lines tracked by the Australian Bureau of Statistics went up in the quarter.
Westpac chief economist Bill Evans, who believes the RBA will lift rates to 0.25 per cent next week, said the large amount of debt held by households would temper very aggressive increases in rates.“[From there], 25 basis points in July and August to be followed by a further 25 basis points in October and November with the cash rate reaching 1.5 per cent by the end of 2022,” he said.
“We are in the middle of a global pandemic, with a war in Europe. Those situations were not in place in 2007. I think everyone would understand that,” he said.But shadow treasurer Jim Chalmers, who refused to commit to extending the Coalition’s reduction in fuel excise if Labor wins the May 21 election, said the government had to take responsibility for the pressures facing the economy.
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