OPINION: If equity investors had assumed Australia’s high household indebtedness would mean the RBA would be reluctant to inflict much pain on the housing sector, they can be a lot less certain of this after Tuesday.
Late last year, a wise market veteran offered Chanticleer some sage advice on equity markets and interest rates: it’s always the second rate rise that spooks investors.to lift the cash rate by 50 basis points at 2.30pm
Investors seemed genuinely spooked, though, a fact perhaps best illustrated by the way the banks – which are net beneficiaries of higher interest rates – were sold off. r – “The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time” – it also suggested the household sector, the labour market and the broader economy were in good shape.Does that mean the RBA will need to raise rates faster and harder than expected to get inflation back to between 2 per cent and 3 per cent?
The breadth of future rate predictions further underscores the uncertainty in the market on where the RBA goes from here.
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