The range of considerations at the Reserve Bank’s final board meeting of 2022 suggests a high degree of uncertainty about the economic outlook.
The Reserve Bank board considered pausing the official interest rate and a super-size half-point jump at its final meeting for 2022, suggesting a high degree ofBoard members said there were arguments in favour of each – including the lag effect of rate rises hitting households – but there was “no clear impetus” for anything other than a business-as-usual quarter-point rise.
Westpac chief economist Bill Evans said with inflation forecast to remain above the RBA’s 2 per cent to 3 per cent target band until 2025, the bank would need to continue tightening monetary policy into 2023. “The key is that the current forecasts which have rates rising further are still pointing to a number of years where the inflation rate is outside the range. So unless there has been a change in the data since those November forecasts were released, the board needs to press on,” Mr Evans said.took it from an emergency-level low 0.1 per cent to 3.1 per cent in just seven months – the highest in a decade and the fastest tightening cycle in a generation.
With a mixed bag of economic data before the meeting, board members felt any other course “would create uncertainty” about how the bank intended to respond to economic data.but it is not on a preset path“Members noted that the size and timing of future interest rate increases would continue to be determined by the incoming data and the board’s assessment of the outlook for inflation and the labour market.
, monthly repayments on a 25-year, $500,000 mortgage will have risen by $834 since May if fully passed through; $1251 for a $750,000 mortgage, and $1668 for a $1 million loan.
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