The Reserve Bank could lift rates even higher than tipped on Tuesday after Treasurer Jim Chalmers said inflation was worse than the March budget forecast as prices for essentials, including food and petrol, continue to rise | rachelclun
due to soaring fossil fuel costs. Average petrol prices for the last week of May reached $2 a litre, rising oil prices eating up the 22 cents a litre fuel tax relief, which is set to end in September.Amid a gas supply crisis, freezing temperatures in Sydney and Melbourne led to a forecast spike in wholesale prices of more than 50 times normal levels last week, forcing the Australian Energy Market Operator to intervene and set a price cap. Federal and state governments willThe RBA considered a 0.
“And so we expect a 0.4 per cent hike taking the cash rate to 0.75 per cent. There is a risk it could even opt for a 0.5 per cent hike.” Across NSW, the average new home loan has reached $800,000 while in Victoria it is now at $650,000, meaningOliver said the recent downturn in the property market, with house prices falling 0.1 per cent in May, was good news for the RBA as it showed the central bank’s moves were getting traction.UBS economists expect the RBA to lift the cash rate by 0.25 percentage points but say there’s a chance of a 0.4 percentage point rise.
They said inflation, which UBS expects to rise further, the upcoming minimum wage decision due from the Fair Work Commission by the middle of June and quick interest rate moves from other central banks will add pressure to the RBA.“We expect the RBA to reiterate ‘soft forward guidance’ they are ‘committed to doing what is necessary to ensure that inflation in Australia returns to target over time. This will require a further lift in interest rates’.
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