Economists from some of the largest banks are urging the government to restrict migrant visas to help ease the housing crisis that is pushing rents and prices of goods higher.
Already a subscriber?Economists are urging the federal government to tighten immigration rules and help bring inflation down as the Reserve Bank considers when or if it should start cutting interest rates.
While working migrants reduce labour shortages and dampen wage pressures – which is also a key driver of inflation – economists warn that the large migration influx is pushing prices higher.“I don’t think it’s helpful to be adding to demand in any form to an economy where there is already excess demand in both goods and the labour market,” said Su-Lin Ong, chief economist Australia for RBC Capital Markets.
“If we have people coming into the country, but the experience is more clogged roads, and homes they can’t afford to buy, then the increase in immigration won’t be sustainable over the long term,” Mr Tichehurst added.“Unless there’s a material policy change, population growth is likely to continue to surprise on the upside,” he warned.despite the government’s adjustments.
Mr Tharenou estimates that the migration surge would add at least a quarter of a percentage point to CPI, and half a percentage point if you include direct and indirect spillovers.The Reserve Bank is expected to upwardly revise its inflation projections following last week’s hot inflation data that prompted traders to price out any rate relief in 2024.
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