The head of Deloitte Access Economics, Pradeep Philip, warns the Reserve Bank is pushing the country to the brink of recession.
Struggling households are being promised a substantial cost-of-living relief package in next week’s federal budget after a shock decision by the Reserve Bank to drive official interest rates to an 11-year high with a threat to go even further.
The move surprised economists, after the financial markets said there was almost no chance the RBA would raise the cash rate given signs the economy was slowing. “We are taking a bit more time than some other countries, on the basis that doing so can preserve some of the gains in the labour market. But there is a limit here.“If we take too long to get inflation back to target, expectations will adjust and life will become more difficult. Today’s further adjustment in interest rates will help with the return of inflation to target in a reasonable period.”
“Today’s rate increase shows that the Reserve Bank is still playing recession roulette, despite briefly and sensibly walking away from the table when it paused rate hikes last month,” he said.Eamon Gallagher “We think that the RBA has done more than enough and we have reached the peak in rates. Continuing to raise rates from here adds to the rising risk of plunging the economy into a recession,” he said.
Increasing the rate of JobSeeker was the key recommendation from the independent Economic Inclusion Advisory Committee’s first report. Its second recommendation was to raise the rate of Commonwealth rent assistance, as rents continue to rise by the biggest rates on record.
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