The Reserve Bank of Australia recently announced that it is holding its interest rates at 4.1% this month, but that doesn't mean it will stay steady in the future as the bank's board sees additional rate increases coming. According to a report by the Australian Broadcasting Corporation, in May of last year, the cash rate objective was 0.1%.
"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable time frame, but that will depend upon how the economy and inflation evolve," RBA governor Philip Lowe said.
Lowe has said that he will be monitoring how predictions of high inflation could increase the rate, and he said the board is determined to return inflation to the target rate. He is also keeping an eye on how prices are set by companies and the types of compensation increase that employees receive.
In the report, Lowe also stated that Australia's inflation rate has passed its high and continued to fall in May's inflation figures. He said business owners reported that labor shortages have lessened as the economic activity in Australia has slowed and labor markets are still not at their previous strength. Due to the high inflation, he stressed the need to continue to put pressure on prices to drive them down.
A first-time house buyer in Perth named James You'd claimed that he entered the housing market through a low-deposit loan recently. He said that since he spent more than 45% of his income on mortgage payments, he was grateful for the delay in rate increases. Moving forward he also anticipates the increases and also noted that he would try to hold out until "mythical rate cuts" come about next year, and he wasn't happy about things becoming more challenging.
The report added that officials see a 50% chance of a recession in Australia over the next 12 months.
