RBA Rate Hike Forecast Shifts as ANZ Bank Sees Elevated Price Pressures
Australia's homeowners face disappointment as ANZ Bank has revised its forecast on interest rates, indicating that the Reserve Bank of Australia (RBA) may hike rates before Christmas. This decision comes after buoyant jobs data was released last Thursday, showing a strong increase in employment.
The labour force data revealed an unexpected rise of 76,300 jobs, significantly surpassing market expectations of a 15,000 increase. The participation rate has also jumped up from 66.7% in May to 67% in June, the highest level since July last year.
ANZ warned that 'while we expect the cash rate to have peaked at 4.35 per cent, we do not rule out ongoing price pressures to push the RBA into a rate hike in November, assuming the August meeting sees no rate change from the Board'. The next rate decision is scheduled for August 11.
The bank's economists pointed out that consumer confidence rose just 0.3 points last week, and while the 'time to buy a major household item' subindex increased, it was largely offset by weaker confidence in personal finances and the economic outlook due to the re-escalation of conflict in the Middle East.
Commonwealth Bank chief economist Luke Yeaman expects the conflict to drag on for at least several weeks or possibly longer in the current dynamic.