There are fears another interest rate rise from the Reserve Bank tomorrow could push Australia into a recession.
Economists are split on whether the bank will lift the cash rate again on Tuesday, after holding it steady at 4.1 per cent earlier this month.
But outgoing governor Philip Lowe warned at the time further hikes would likely be needed, despite a slowing rate of inflation.
However, some have warned that further rate rises could risk an economic contraction.
AMP chief economist Shane Oliver told the Sydney Morning Herald that recent inflation data suggested the RBA should hold the rate steady.
“The RBA is now getting what it wanted on inflation and the ongoing weakness in real retail sales highlights the high and increasing risk that it will knock the economy unnecessarily into recession if it keeps tightening,” he said.
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“That said, it is a close call and given the RBA’s concerns about services inflation and wages it wouldn’t be a surprise to see the RBA hike by another 0.25 per cent.”
Mortgage holders with a $500,000 loan are now paying approximately $1217 more a month than they were in May last year.
Annual inflation for goods was 5.8 per cent in the latest data, down from 7.6 per cent in the previous quarter.
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