The Consumer Price Index from the Australian Bureau of Statistics yesterday revealed that annual inflation had slowed from a 7.8 increase in the December quarter last year, to 7 per cent in the first quarter of 2023.
Monthly growth is also slowing, from 6.8 per cent in February to 6.3 per cent in March.
However, finance comparison website RateCity said that while slower growth could see a further pause on rate hikes, 7.0 per cent was still well outside the RBA’s target for inflation.
Therefore another cash rate hike – the 11th since the RBA began increasing them from May last year – could well be on the cards.
The RBA opted to not issue another increase in April.
Another 0.25 per cent increase would see the cash rate lift to 3.85 per cent, the highest level since April 2012.
RateCity found another 0.25 per cent rate rise would mean the “average borrower” with a $500,000 loan before the hikes started in May last year, could soon be paying a total of $1058 more a month.
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”It’s going to be another close call at Tuesday’s RBA meeting,” RateCity research director Sally Tindall said.
“A second pause would buy the RBA more time to see how households are holding up against the 10 rate hikes to date. This round of inflation data gives the Board cover to do this.”
She said many loan-holders would still only have had the eighth or ninth hike passed on to them so far, meaning they would be facing a further increase even if the RBA opted for a pause.
“Inflation in Australia might be moving in the right direction, but ultimately it’s still too high,” Tindall said.
“While many economists are predicting cash rate hikes as soon as the end of this year, borrowers should keep their heads down and focus on getting through the next few months.
“It’s going to be a long, tough winter for many households around the country. If you don’t think you can make it through without breaking the bank, stick up your hand and ask for help.”
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