'Close call': Another rate pause possible as inflation continues to slow

New figures displaying inflation continues to sluggish might see Australians dodge an rate of interest hike subsequent month — however it will likely be a “close call”.

The Consumer Price Index from the Australian Bureau of Statistics yesterday revealed that annual inflation had slowed from a 7.8 enhance within the December quarter final 12 months, to 7 per cent within the first quarter of 2023.

Monthly development can also be slowing, from 6.8 per cent in February to six.3 per cent in March.

The RBA could choose to go away fee hikes on maintain one other month. (AP)

However, finance comparability web site RateCity stated that whereas slower development might see an additional pause on fee hikes, 7.0 per cent was nonetheless properly exterior the RBA’s goal for inflation.

Therefore one other money fee hike – the eleventh for the reason that RBA started rising them from May final 12 months – might properly be on the playing cards.

The RBA opted to not situation one other enhance in April.

Australians are accessing their savings to cover their daily expenses, according to a Reserve Bank analysis. — Australians are going through heavy monetary pressures. (9News)

Another 0.25 per cent enhance would see the money fee carry to three.85 per cent, the best stage since April 2012.

RateCity discovered one other 0.25 per cent fee rise would imply the “average borrower” with a $500,000 mortgage earlier than the hikes began in May final 12 months, might quickly be paying a complete of $1058 extra a month.

”It’s going to be another close call at Tuesday’s RBA meeting,” RateCity analysis director Sally Tindall stated.

“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 stated many loan-holders would nonetheless solely have had the eighth or ninth hike handed on to them to this point, which means they’d be going through an additional enhance even when the RBA opted for a pause.

“Inflation in Australia might be moving in the right direction, but ultimately it’s still too high,” Tindall stated.

“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 protracted, robust winter for a lot of households across the nation. If you do not assume you can also make it by means of with out breaking the financial institution, stick up your hand and ask for assist.”

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