The RBA started lifting the cash rate,currently 3.1 per cent,in May last year after taking it down to a record low of 0.1 per cent in late 2020. Before tomorrow’s decision,the annual repayments on a $758,000 mortgage will have climbed by almost $16,000.
Gareth Aird,the Commonwealth Bank’s head of Australian economics,said he expected the RBA to inflict another quarter percentage point rate increase on borrowers,but there was a strong chance it could go further. He said the breadth and size of the lift in inflation through the December quarter meant the RBA was likely to look at a 0.4 percentage point increase.
According to Aird,if the bank took the cash rate to 3.5 per cent this week,it would then be able to sit back over coming months to determine how the tightening of monetary policy was affecting the economy.
“We think the case to raise the cash rate by 40 basis points to a conventional metric of 3.5 per cent,coupled with a stated intention to hold the policy rate steady over the period ahead will be on the table,” he said.
“We think that the RBA is close to pausing in their tightening cycle.”
In December,the average loan in NSW lifted to $758,000,while in Victoria it increased to $624,000,its highest level since the middle of last year. Nationally,the average loan was $604,000.