The Real Estate Institute of Australia (REIA), President, Mr Hayden Groves said RBA’s latest and more modest cash rate increase to 2.6 per cent is an indicator Australia’s inflationary pressures are beginning to ease.
“The cash rate has been rapidly increased from emergency settings in a short period of time and in considering this, the RBA decided to increase the cash rate by 25 basis points this month as it assesses the outlook for inflation and economic growth in Australia.
“At its meeting today, the Board decided to increase the cash rate target by 25 basis points when a 50-basis point rise was widely expected. It also increased the interest rate on Exchange Settlement balances by 25 basis points to 2.50 per cent.
“It would be prudent now to wait for the lagged response to the five earlier increases with indications that tighter monetary policy is contributing to a slowing in household spending and confidence, business investment and normalising of house prices as increased mortgage payments squeeze disposable real incomes.
“All eyes will be on the 25th October Federal Budget and the September quarter CPI the following day. These will be a major determinant in the RBA Board’s November decision.
“Taking the cash rate much above this level would risk an unnecessarily abrupt slowing in growth in 2023,” he said.
Mr Groves said rising interest rates have assisted in curtailing the extraordinary growth the property market has experienced since 2020 adding that “first home buyers are benefitting from the stabilised housing prices and rising cash rates which is adding income to their deposits.”
