RBA brings cash rate to 0.85%


The Reserve Bank of Australia (RBA) decided to lift the cash rate again this month by 50 basis points to 0.85%.

The rate hike this month follows the surge in inflation reading that hit 5.1% over the first quarter of the year, well above RBA’s expectation.

Furthermore, the unemployment rate fell to its lowest record since 1974, down to 3.9% in April.

PropTrack Economist Paul Ryan said more rate increases are expected this year, especially given the higher-than-anticipated inflation.

“But just how high interest rates will be at the end of the year is a key source of uncertainty for the housing market,” he said.

Financial markets are projecting a cash rate two-percentage points higher at the end of the year, which would raise mortgage repayments by another 24%.

“Major bank forecasters, however, do not view it likely the RBA will increase rates this quickly, predicting rate rises closer to half that much,” Mr Ryan said.

More to come…

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