Consumer confidence tanks after this month's surprise interest rate rise, as a former Reserve Bank of Australia (RBA) governor warns higher inflation and interest rates are here to stay.
abc.net.au/news/consumer-confidence-down-amid-generational-inflation-battle/102350772The Reserve Bank of Australia has warned that further interest rate increases are still possible, with a former RBA governor arguing the low-rate era is over, leaving households feeling like Australia is heading for recession.
However, the hurdle for further increases is likely to be high, given that May's decision was "finely balanced", with the RBA spending as much space outlining the case for keeping rates on hold as for the increase. The bank outlined the effect of a recent migration "influx" on rents, which were expected to add to inflation pressures for some time, while also noting strength in the jobs market, weak productivity growth and the rising rate of services inflation."If these risks materialised, they would further delay the return of inflation to target, with the prospect of a damaging shift in inflation expectations," the minutes recorded.
The housing market recovery has extended from Sydney earlier this year to the other capitals and some regional markets.
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