The Reserve Bank of Australia has not raised interest rates for several years – and according to Shane Oliver, Chief Economist at AMP Capital, this should not change any time soon.
"The slowdown in the job market and the fall in real estate prices mean that I have trouble seeing the RBA raise interest rates," he said. .
"We have an expected rate hike in pencil by 2020. But there will definitely be no rate hike … until the end of the year."
Indeed, there is a slight risk that in 2019, the RBA will again have to reduce its interest rates.
"This is not our basic case," Oliver said.
"But we can not rule out the risk of a further rate cut if the housing sector's weakness affects the entire economy and threatens downward inflation."
The weakening of housing prices will weigh on household wealth, which will limit consumer spending at a time when the household savings rate is at its lowest level for 11 years and where wage growth remains very weak. This is likely to keep inflation under stress at the bottom of the RBA target of 2-3%.
"Overall, growth should fall back to around 2.5-3%, which is lower than what the RBA expects at a time when inflation will likely remain low," Oliver added.
.
"We think the rates have been pending for some time until 2020, but we can not exclude a further reduction in the RBA's rates if real estate price falls occur." intensify to the point of further threatening inflation prospects.
Read the complete article by Shane Oliver
in the January 2019 edition of
The magazine Your real estate investment
for sale in news agencies and
Coles supermarkets from December 6th to January 10th
or download the magazine now.
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