The RBA decision brings the cash rate to the highest level since 2015 with mortgage holders set to face higher repayments
– that the bank and Treasury expect will peak at almost 8% by the year’s end.
The path of reducing inflation without stalling the economy was a “narrow one and clouded in uncertainty, not least because of global developments”, Lowe said. “The outlook for global economic growth has deteriorated due to pressures on real incomes from high inflation, the tightening of monetary policy in most countries, Russia’s invasion of Ukraine, and the Covid containment measures and other policy challenges in China,” he said.
The Australian Bureau of Statistics will release June quarter GDP growth data on Wednesday. Economists are expecting both quarterly and annual growth rates to come in at around the same as in the March quarter but note that the impact of the higher interest rates are mostly yet to be felt by households and businesses alike.Prior to today’s announcement, investors had been predicting that the RBA’s cash rate will keep rising until about mid-2023 when it will reach almost 4%.
Ahead of the RBA rates verdict , investors were viewing the likelihood the cash rate would rise 50bp to 2.35% as an 83% chance. They're also predicting rate would peak at about 3.85% by July next year.
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