The RBA hikes rates by 0.25%. Here are five reasons why the RBA was right to slowdown and the top is near

AMP’s Dr Shane Oliver discusses the rising interest rate environment in this economic update.

Dr Oliver summarises the key points as follows:

  • The RBA sensibly dropped back to a 0.25% hike this month taking the cash rate to 2.6%. Its still signalling more hikes ahead though.
  • Slowing the pace of rate hikes makes sense: the RBA needs to allow time to assess the impact of rate hikes so far given that they impact with a lag; many households will see a sharp rise in mortgage payments which will depress spending through next year; global inflationary pressures are easing; inflation pressures are less in Australia than elsewhere; and there is now a high risk of global recession which will impact Australia.
  • We still see the cash rate peaking at 2.85% but acknowledge upside risk to 3.1%.

You can access a copy of this update here:

Economic Update