Reserve Bank is expected to raise interest rates again tomorrow, raising new mortgage pressure on millions of Australian households whose monthly budgets are already tight.
Economist Richard Denniss of the Australian Institute predicted that interest rates would rise by between 0.25 and 0.4%, causing “a lot of pain” to many.
Some economists think the RBA could move even more aggressively, affecting mortgage holders with a 0.5 percent increase.
The Reserve Bank will meet tomorrow to raise interest rates for the second time in interest rates for the second time in as many months. (Peter Rae) For a $ 30 million $ 1 million mortgage, an RBA increase of 0.25 percent would increase monthly payments by $ 131, with a 0.5 percent increase that would translate into $ 265.
“The Reserve Bank has indicated that we will see higher interest rates over the next six to 12 months,” Denniss warned.
“This would mean that mortgage payments would increase by thousands of dollars depending on how people’s mortgages are.”
Given the recent jumps in inflation and rising food, gasoline and energy costs, Denniss said employers should now start raising wages, otherwise the government would have to “intervene and drive things. “
“Earlier, the Reserve Bank has said it would not raise interest rates until wages start to rise (but) it is clear that this is not happening,” he said.
“We’re seeing interest rates go up now and wages haven’t gone up yet.”
Some economists are covering their bets for the standard quarter of a one percent interest rate hike, but others say the RBA could move much more aggressively and double it to 0.5 percent. (AAP)
Employers had to show “a certain willingness” to negotiate a better wage or the government and the Fair Work Commission should consider intervention, he said.
Fruit prices have risen 4.9% and a two-liter bottle of Coca-Cola now costs 50% more.
The RBA will make its announcement tomorrow at 2.30pm (AEST).