May Interest Rate Decision – Rates Have Begun their Upward Journey!

May 3, 2022 5:04 pm

Today we had the first interest rate hike in Australia in 11 and a half years. Shane Oliver, AMP’s Head of Strategy and Chief Economist from AMP made the following key points:

  • The RBA has hiked the cash rate by 0.25% taking it to 0.35% and moved to a clear hawkish bias by signalling more rate hikes ahead.
  • We expect the cash rate to rise to 1.5% by year-end and to 2% by mid next year. But the RBA will only raise rates as far as necessary to cool inflation and high household debt has likely made rate hikes more potent.
  • Rate hikes are unlikely to de-rail the economic recovery just yet as monetary policy is still very easy, but they will add to the slowdown in home prices, where we see average dwelling prices falling 10 to 15% into early 2024

If you have any questions or concerns in relation to the first of a number of expected interest rate rises, please feel free to contact us.