The ‘race that stops the nation’ will be on the back of homeowners’ minds on the first Tuesday in November as the Reserve Bank of Australia makes a crucial monetary policy decision. The majority of ‘experts’ predicted that the cash rate had peaked, but new inflation figures released suggest that we may not be out of the interest rate rises yet.
The Consumer Price Index (CPI) rose by 1.2% in the September 2023 quarter, according to the latest data from the Australian Bureau of Statistics. This figure is higher than the 0.8% rise in June 2023 quarter. The most significant contributors to the increase were new dwellings (+4.9%), automotive fuel (+19.7%), rents (+7.6%) and tobacco (+7.5). These new figures will significantly influence the RBA’s decision on Tuesday, the 7th.
On the 3rd of October, when the RBA decided to hold rates at 4.10%, they noted in the meeting minutes that “In reaching their decision, members noted that some further tightening of policy may be required should inflation prove more persistent than expected. The board has a low tolerance for a slower return of inflation to target than currently expected.” If you’re hoping for a rate hold, this is damning evidence when paired with the recent inflation rise of 1.2% in September 2023 (which is greater than 0.8% rise in June).
ANZ, CBA, and WBC’s key economists still predict that the cash rate will hold at 4.10%, in line with their previous forecasts, while NAB economists are still factoring in another 0.25% increase. Come Tuesday, the 7th of November, people will be holding their breath, but not on the finish of the Melbourne Cup, but rather whether rates will increase.
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