RBA’s final meeting minutes reveal concerns about higher spending over summer holidays without Covid restrictions
The Reserve Bank has put homeowners on notice that they face further interest rate increases in the new year if inflation continues to spiral and spending remains unchecked over the holiday period.reveal it is on a mission to lower inflation amid concerns about higher spending over summer holidays without Covid restrictions.
The bank chose to raise interest rates by another 25 basis points this month, despite considering a 50 basis point rise, bringing the overnight cash rate to 3.1%. But it has warned that, in the new year, if inflation was not heading down, and substantially so,The December minutes, released on Tuesday, show there are signs people are feeling the impacts. Thewith consumers choosing less expensive stores.
The board was told that homeowners with mortgages were continuing to add to their offset and redraw accounts, although at a slower rate than during the pandemic when spending was constrained by lockdowns and border closures.when people roll off their fixed interest rates and into the new interest rate landscape, which will see their repayments increase by more than $850 a month for a $500,000 loan and more than $1,000 a month for a $750,000 loan.
But with the board not seeing the inflation drop off it wants, it “expects to increase interest rates further over the period ahead”. It’s not a “pre-set path” and the size and timing of any interest rate hikes will depend on the inflation outlook and what’s happening in the labour market.“While household spending was expected to slow over the period ahead, the timing and extent of this slowdown was uncertain,” the board reported.
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