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RBA cash rate at 15-year high as spending keeps growing

With the cash rate lifted this year to 15-year highs, economists say four hikes have not yet fully passed through to the broader economy, despite rising mortgage default risks.

Reported · Written up by our desk · North America

The Guardian Economics reports that Australia’s Reserve Bank has pushed the cash rate to a 15-year high as it continues hiking, aiming to curb inflation back below 3%.

The outlet says consumer confidence has fallen alongside the rate increases, while household spending is still growing, which economists view as evidence that this year’s four rate hikes have not yet fully hit the economy.

According to The Guardian Economics, the surprising mix of weaker confidence and resilient spending suggests the current approach may be less effective at fighting inflation than in prior cycles.

The piece adds that, if the interpretation holds, it could mean additional interest rate rises are still possible.

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