The Conversation’s expert panel expects the Reserve Bank to cut interest rates two to three times over the next 18 months, with the first cut likely in March.
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The Reserve Bank will keep rates high until it sees clear evidence inflation is heading back toward its target band. It’s really that simple.
Every time the Reserve Bank has pushed up interest rates in order to take money out of the system, it’s also been putting money in, in a way it didn’t use to.
Australian financial markets are now pointing to a close to zero chance of further rate rises – with a fair chance of a rate cut next year. That’s thanks to the latest news from the US and UK.
It’ll now be a frugal Christmas in many Australian homes. But there is a glimmer of good news: if we do tighten our belts, rates could start to come down by as early as the middle of next year.
The good news includes a return to real wage growth and a restrained increase in unemployment. The bad news includes even higher home prices and a per-capita recession.
Of all the things we can do to boost productivity, working harder is one of the least likely to make a difference.
Governor Philip Lowe says it is “not unreasonable” to expect the cash rate to climb to 2.5%. That’s an extra $600 to service a $500,000 mortgage.
Of the news on prices, wages, interest rates and unemployment, only the unemployment update looks set to be positive for the Coalition.
Enormous price rises beyond Australia’s control are cutting our standard of living. Cutting it further by rising rates won’t help.
The Reserve Bank has scheduled an announcement for Thursday. The government will unveil a second coronavirus stimulus package within days.
Even when interest rates are already low, on balance further cuts boost rather than harm confidence.
Interest rate cuts don’t work like they used to, and they help us put off the hard things we need to do to improve our lives.
The Reserve Bank has adjusted rates in previous election campaigns, but it needs to have a very, very, good reason.
While the RBA might not be able to influence the current cash rate, it can still influence longer-term rates by offering guidance about its future policy decisions.
Statements from the RBA show it’s little wonder markets are not predicting a rate increase this year.
The data shows a tricky balancing act for policy makers. Interest rates will need to rise but too quickly could squash the recovery.
Top contributors
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Visiting Fellow, Crawford School of Public Policy, Australian National University
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Professor of Economics, UNSW Sydney
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Professor of Economics, The University of Melbourne
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Lecturer in Economics, Monash University
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Professor, Monash University
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PhD Student in Economics, Deakin University
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Professor of Economics, University of Canberra
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Program Director, Trade and Investment, United States Studies Centre, University of Sydney
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Principal Research Fellow, Melbourne Institute of Applied Economic and Social Research, and Professor of Economics, Department of Economics, The University of Melbourne
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Industry Professor, University of Technology Sydney
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Postdoctoral Research Fellow, The University of Melbourne
