Peak body says the evidence suggests that the central bank’s rate rises could be coming to an end
The evidence suggests that the Reserve Bank’s program of repeated interest rate hikes could be coming to an end, according to the Real Estate Institute of Australia.
REIA cited data from the Australian Bureau of Statistics that showed the Consumer Price Index (CPI) rising 6.8% in the 12 months to February.
“THis is down on the annual figure for the year to January of 7.4% and 8.4% for the 12 months to December 2022, and points to a clear downward trajectory in the rate of increase,” REIA president Hayden Groves said. “When ABS excludes the volatile items of fruit and vegetables and automotive fuel, the annual increase is 6.9% – down on the 12 months to January figure of 7.5%.”
Groves said the most significant contributors to the annual increase in February’s CPI indicator were housing (9.9%), food and non-alcoholic beverages (8%), and transport (5.6%). The annual increase for the housing group was lower than Jaunary’s 10.4% and December’s 10.6%.
Rents continued to rise, posting an annual increase of 4.8% last month, the same as January’s reading and up from the December reading of 4.1%.
“These figures follow yesterday’s retail sales figures … which edged up by just 0.2% in nominal terms in February, but in real terms is a contraction, and GDP figures earlier in the month showing a slowdown in the momentum of the Australian economy,” Groves said.
Read next: Mixed outlook for real estate – REIA
He said the economic outlook was also “complicated” by the global financial stability concerns that have emerged over the last month.
“With the minutes from the March meeting suggesting the RBA bank might press the pause button rather than proceeding with an 11th rate hike at next week’s meeting, allowing additional time to assess the outlook for the economy, I feel that we are most likely to be nearing the end of successive months of interest rate increases,” Groves said.
Other views
Many economists agree with Groves that the central bank will likely pause rates amid the financial turmoil in the wake of three US bank collapses and the failure of Credit Suisse.
Westpac economist Bill Evans recently predicted that the RBA would pause rate hikes at its April 4 meeting before raising them one final time at its May 2 meeting.
Other economists, however, pointed to February’s strong jobs report as a sign that the RBA would continue its rate-hiking program.
Have something to say about this story? Let us know in the comments below.
