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Reserve Bank Expected to Lift Cash Rate to an 18-Year High
Australia's central bank is expected to lift its cash rate to an 18-year high on Tuesday with a fifth hike.
Key points
- Brent crude has risen from about $US72 a barrel in early July to above $US110 in recent days, according to the article.
- CBA forecasts unemployment peaking at 5.1%, while NAB sees it reaching as high as 5.4% by the end of next year.
- Shane Oliver of AMP said there is a significant and rising risk of recession, which could reach 45% if the RBA hikes.
Why it matters. Shane Oliver warned that a property correction of that size could deliver a substantial hit to the economy, and recession risk could rise to as high as 45% should the RBA hike as expected.
The RBA is widely expected on Tuesday to make its fifth rate hike, lifting the cash rate to its highest since 2008, an 18-year high. CBA's Belinda Allen said the Middle East conflict and collapsing house prices would cut real GDP to 1% by the middle of next year, nearly half the previous 1.8% estimate. NAB's Gareth Spence forecast unemployment rising from 4.7% to as high as 5.4% by the end of next year, while AMP's Shane Oliver said home prices could fall by as much as 15%.
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Reserve Bank Expected to Lift Cash Rate to an 18-Year High
The Reserve Bank of Australia is widely expected to lift the cash rate to an 18-year high. Major bank economists say the economy is set for a sharper and longer slowdown. The central bank is being forced to keep interest rates high to bring inflation under control. Markets are closely watching the decision for its effect on households and on ASX stocks. This live coverage will be updated as the decision and economists' reaction emerge.