The Reserve Bank board faces one of its toughest meetings on Tuesday as it debates a super-sized rate rise amid growing global financial turmoil.
, now at 2.35 per cent, at every one of its board meetings since May. It is the fastest increase in interest rates since the mid-1990s and includes four consecutive half percentage point hikes.
“This is the chance they have to give forward guidance on whether they continue with 50 basis point increases or we’re close – or even at – the point that they start to slow things down with a 25 basis point increase. Financial markets put the chance of another half percentage point rate increase at Tuesday’s meeting at 80 per cent, but economists are more mixed with some expecting the RBA to back a quarter percentage point lift.AMP Capital chief economist Shane Oliver said if the Reserve Bank moved rates in line with financial market expectations, the economy would tumble into recession.
The housing construction sector has been one of the key sources of inflation over the past 12 months.High levels of construction activity and ongoing building and labour shortages have taken the annual inflation rate across the sector to an all-time high of 20.3 per cent. A year ago, the rate had fallen to just 1 per cent.
Over the past 12 months, the cost of plywood and steel reinforcement has increased by more than 25 per cent. Some structural timber products have gone up in price by more than 40 per cent.
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