The Oceania Times

Top Menu

  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions

Main Menu

  • Australian Economy
  • Brokers
  • Commodities
  • Currencies
  • Financial Market
  • Gold and Precious Metals
  • Investment
  • Stock Shares
  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions

logo

The Oceania Times

  • Australian Economy
  • Brokers
  • Commodities
  • Currencies
  • Financial Market
  • Gold and Precious Metals
  • Investment
  • Stock Shares
  • Asian shares fall as investors brace for inflation report

  • A-Mark Precious Metals (NASDAQ:AMRK) vs. Maison Luxe (OTCMKTS:MASN) Head-To-Head Comparison

  • Stock Market LIVE: Indices flat; Nifty below 17,500; IT, Media drag

  • The big change coming to Australian inflation after Reserve Bank governor Philip Lowe laughed at

  • South Korean won, Philippines peso lead losses among subdued Asian currencies

Australian Economy
Home›Australian Economy›Australia’s central bank drastically raises inflation forecasts, flags more rate hikes

Australia’s central bank drastically raises inflation forecasts, flags more rate hikes

By Megan
May 5, 2022
14
0
Share:

A pedestrian walks past the Reserve Bank of Australia building in Sydney on May 03, 2022. The central bank warned core inflation could now hit 4.6% by December, a startling two percentage points higher than its previous forecast made in February.

Brook Mitchell | Getty Images News | Getty Images

Australia’s central bank on Friday drastically revised up forecasts for inflation, foreshadowing how far interest rates might have to rise to bring the country’s cost of living crisis under control.

In its quarterly statement on monetary policy, the Reserve Bank of Australia (RBA) warned core inflation could now hit 4.6% by December, a startling two percentage points higher than its previous forecast made in February.

That would be well above the RBA’s 2-3% target band and inflation was only seen returning to the top of the band by mid- 2024, suggesting a lengthy tightening cycle was in store.

At the same time, unemployment was now forecast to drop further to 50-year lows of 3.6% over the year ahead and finally push up wages after years of miserly gains.

Annual wage growth is seen accelerating to 3.0% by the end of this year, from the current 2.3%, and to 3.7% by mid-2024.

Stock picks and investing trends from CNBC Pro:

It was this potent mix that led the RBA Board this week to raise interest rates by 25 basis points to 0.35%, the first increase in more than a decade, and to flag a lot more hikes ahead.

“The Board is committed to doing what is necessary to ensure inflation in Australia returns to target over time,” RBA Governor Philip Lowe wrote in the 68-page statement. “This will require a further lift in interest rates over the period ahead.”

Markets are pricing in another hike to at least 0.60% in June and then a move a month to reach 2.75% by Christmas. The RBA’s own forecasts are based on rates of 1.75% by year end and a peak around 2.5% by the end of 2023.

Lowe himself nominated 2.5% as a rate that would be neutral for the economy, but was noncommittal on how fast, or whether, they might get there.

Not alone

The RBA is hardly alone in this predicament with the Federal Reserve hiking by half a point this week and flagging similar moves in June and July. The Bank of England also hiked on Thursday but was notably more downbeat on the economic outlook.

The sudden rise in Australian borrowing costs has been unwelcome news to Prime Minister Scott Morrison as he fights a tough election campaign based squarely on economic management.

It was also a blow for Australian households who hold a record A$2 trillion of mortgage debt amid one of the biggest housing bubbles in the country’s history.

The RBA is confident consumers can weather these ill winds, thanks in part to an extra A$272 billion of savings households built up during the pandemic.

The central bank forecast the economy would grow a healthy 4.2% this year, before slowing to 2.0% in 2023 as rising rates, higher inflation and a moderation in house prices take a toll.

There were plenty of unknowns, however, ranging from new coronavirus variants, to the conflict in Ukraine, global supply bottlenecks and how households would react to the new reality of higher inflation.

Source link

TagsAsia EconomyAustraliabusiness newsCentral BankingInflationInterest Rates
Previous Article

Dual broker-advisors exceed sole broker registrants for ...

Next Article

Australia’s falling real wages will help fight ...

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0

Megan

Related articles More from author

  • Gold and Precious Metals

    Fed is talking down inflation, but talk is still cheap

    June 24, 2022
    By Megan
  • Stock Shares

    Bed Bath & Beyond, Carnival, Upstart and more

    June 29, 2022
    By Megan
  • Australian Economy

    Australia’s inflation figures are clear, but when it comes to official wages data, we might be flying blind

    August 1, 2022
    By Megan
  • Australian Economy

    The first challenge facing Anthony Albanese as prime minister is to restore Australia’s economy

    May 22, 2022
    By Megan
  • Financial Market

    Looking through supply-side inflation is a flawed approach: Viral Acharya

    August 2, 2022
    By Megan
  • Gold and Precious Metals

    XAU/USD stays pressured around $1,850 with eyes on US Inflation

    June 5, 2022
    By Megan

Leave a reply Cancel reply

You may interested

  • Stock Shares

    AT&T, DR Horton, Travelers and more

  • Gold and Precious Metals

    Is this ‘bizarre’ time for gold finally over? Gold price is about to rally and now is ‘the perfect time’ to buy, says Jim Cramer

  • Australian Economy

    Security Matters Announces Business Combination with Lionheart III Corp, Expecting Valuation at US$360 Million on Nasdaq Listing

  • LATEST REVIEWS

  • TOP REVIEWS

Timeline

  • August 10, 2022

    Asian shares fall as investors brace for inflation report

  • August 10, 2022

    A-Mark Precious Metals (NASDAQ:AMRK) vs. Maison Luxe (OTCMKTS:MASN) Head-To-Head Comparison

  • August 10, 2022

    Stock Market LIVE: Indices flat; Nifty below 17,500; IT, Media drag

  • August 10, 2022

    The big change coming to Australian inflation after Reserve Bank governor Philip Lowe laughed at

  • August 10, 2022

    South Korean won, Philippines peso lead losses among subdued Asian currencies

Best Reviews

Latest News

Stock Shares

Asian shares fall as investors brace for inflation report

People walk past a screen displaying the Hang Seng stock index outside Hong Kong Exchanges, in Hong Kong, China July 19, 2022. REUTERS/Lam Yik Register now for FREE unlimited access ...
  • A-Mark Precious Metals (NASDAQ:AMRK) vs. Maison Luxe (OTCMKTS:MASN) Head-To-Head Comparison

    By Megan
    August 10, 2022
  • Stock Market LIVE: Indices flat; Nifty below 17,500; IT, Media drag

    By Megan
    August 10, 2022
  • The big change coming to Australian inflation after Reserve Bank governor Philip Lowe laughed at

    By Megan
    August 10, 2022
  • South Korean won, Philippines peso lead losses among subdued Asian currencies

    By Megan
    August 10, 2022
  • Recent

  • Popular

  • Comments

  • Asian shares fall as investors brace for inflation report

    By Megan
    August 10, 2022
  • A-Mark Precious Metals (NASDAQ:AMRK) vs. Maison Luxe (OTCMKTS:MASN) Head-To-Head Comparison

    By Megan
    August 10, 2022
  • Stock Market LIVE: Indices flat; Nifty below 17,500; IT, Media drag

    By Megan
    August 10, 2022
  • The big change coming to Australian inflation after Reserve Bank governor Philip Lowe laughed at

    By Megan
    August 10, 2022
  • Asian shares fall as investors brace for inflation report

    By Megan
    August 10, 2022
  • Australian economy survived Covid better than most but recovery could slow, OECD says | Australian ...

    By Megan
    September 14, 2021
  • The Best Online Brokers, According to 5 Financial Experts

    By Megan
    September 14, 2021
  • Is Disaster Looming for Australia’s Economy?

    By Megan
    September 29, 2021

Trending News

  • Stock Shares

    Asian shares fall as investors brace for inflation report

    People walk past a screen displaying the Hang Seng stock index outside Hong Kong Exchanges, in Hong Kong, China July 19, 2022. REUTERS/Lam Yik Register now for FREE unlimited access ...
  • Gold and Precious Metals

    A-Mark Precious Metals (NASDAQ:AMRK) vs. Maison Luxe (OTCMKTS:MASN) Head-To-Head Comparison

    A-Mark Precious Metals (NASDAQ:AMRK – Get Rating) and Maison Luxe (OTCMKTS:MASN – Get Rating) are both small-cap consumer discretionary companies, but which is the superior business? We will compare the ...
  • Stock Shares

    Stock Market LIVE: Indices flat; Nifty below 17,500; IT, Media drag

    Asian markets started on a negative note following a retreat in Wall Street. This was mostly due to the caution ahead of US inflation data that will shape nvestor expectations ...
  • Australian Economy

    The big change coming to Australian inflation after Reserve Bank governor Philip Lowe laughed at

    How Reserve Bank boss getting LAUGHED at on the world stage will radically change Australia’s economy The Australian Bureau of Statistics is trialing a new monthly inflation data series Reserve ...
  • Currencies

    South Korean won, Philippines peso lead losses among subdued Asian currencies

    BENGALURU (Aug 10): Most Asian currencies were subdued on Wednesday, while most stock markets in the region fell, tracking losses on Wall Street, as investors awaited US inflation data later ...
  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions
© Copyright The Oceania Times. All rights reserved.

SUBSCRIBE TO OUR NEWSLETTER

Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.