Wednesday evening and this morning I gave interviews to Sky News and Radio 2GB discussing Wednesday’s inflation numbers.
These saw Australia’s inflation rate fall by more than forecast by economists and the RBA, suggesting the RBA will keep rates on hold.
However, I argued that Australia’s sticky services inflation, which has risen to its highest annual level since 2001, would concern the RBA:
Part of this services inflation is been driven by rampant rental growth (driven by the Albanese Government’s extreme immigration) and soaring energy costs (electricity and gas) due to gouging from the gas cartel.
I also argued that the RBA will probably seek to do one more tactical rate hike before new governor Michele Bullock takes control in October.
Then Bullock can start her term off well by cutting rates to the cheers of the Australian people.
The Sky News interview can be viewed below:
The more in depth Radio 2GB interview can be listened to here:
My personal view is that RBA has already hiked too much, especially given there is more monetary tightening ‘built-in’ with huge volumes of fixed rate mortgages still to reset from rates of around 2% to variable rates approaching 7%.
But for tactical reasons, the RBA will probably err on the side of caution and deliver another ‘insurance’ hike in August or September so that incoming governor Michele Bullock doesn’t need to when she takes over in October.
Hopefully I am proven wrong.
