RBC Capital Markets CEO and chief economist Su-Lin Ong expects the Reserve Bank to implement another 50 basis point cash rate hike in July.
He said yesterday’s cash rate hike was part of the RBA’s efforts to return inflation to its target.
“It’s pretty clear from the Reserve Bank statement yesterday … it won’t waste time trying to get rates back to a more neutral environment,” Ong told ABC.
“It is quite clear that recovering inflation between 2% and 3% is their only goal right now.
“Inflation is above 5 percent, will increase, we know that there are multiple drivers of supply chain disruptions, the war in Ukraine and high prices for energy and raw materials, which will also increase “Public service prices. There are a lot of factors and inflation is going much higher and the bank has to get over it.”
While Ong expects inflation to continue rising, he said households, on average, were about 20 months ahead of payments, which would provide a cushion against rising cost of living.
“We are reasonably confident that the economy as a whole can be managed … there will be pockets that will feel more financial pain in addition to other cost of living pressures, so for those who entered the housing market for the last six months or so, they have had smaller deposits or less strong working conditions, they will definitely feel a little more pain. “