The Reserve Bank slashes its forecasts for economic growth as rate rises, house price falls and a souring global economy weigh on Australia's outlook.
The Reserve Bank has slashed its forecasts for economic growth as rate rises, house price falls and a souring global economy weigh on Australia's outlook.
Higher interest rates are expected to be a major factor behind tightened belts, with the RBA basing its forecasts on an assumption that its cash rate would hit 3 per cent by the end of the year – up from 1.85 per cent currently – before falling back a little by the end of 2024. Falling house prices, combined with the previous construction boom inspired by ultra-low interest rates and the previous government's HomeBuilder grant, will result in dwelling investment falling sharply over 2024.
After peaking at 7.75 per cent by the end of this year, inflation is still expected to be about 6.2 per cent by the middle of next year, and 4.3 per cent at the end of 2023."Contacts within the bank's liaison program generally expect further significant increases in retail electricity prices in 2023," the RBA observed.
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