RBA Weighs Another Rate Hike Amid Soaring Inflation

Australia's housing market is bracing for another potential rate hike from the Reserve Bank of Australia (RBA), which could push interest rates to their highest level in 15 years. Macquarie Bank predicts a fourth rate hike will be delivered before the end of the month, with NAB forecasting a 25-basis-point increase at the next meeting.

According to RBA assistant governor Sarah Hunter, the board 'may well have to raise interest rates to tackle' high inflation, which has been above target for some time. Deputy governor Andrew Hauser echoed this sentiment, stating that hitting the two-to-three per cent inflation range is a priority and that they are aware Australians are 'furious about inflation.'

The RBA's target band for inflation is between 2-3%, but current figures show it at 3.5% in July, exceeding forecasts. Dr. Hauser downplayed the impact of falling house prices on inflation, noting that house prices remain 3% higher than last year and almost 50% higher than the beginning of this decade.

Meanwhile, consumer sentiment has plummeted 14% among mortgage holders, with confidence in the economy dropping by a significant margin. Economists predict further declines as high interest rates combine with federal budget tax changes, potentially leading to the largest housing price correction in modern history.