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RBA makes first cash rate call for 2022
In this special announcement, in partnership with Legal Home Loans, learn the outcome of today's RBA meeting.
Miranda Brownlee
The Reserve Bank of Australia has announced its decision on the official cash rate for this month amid speculation that a rate cut may happen sooner than expected.
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This month, the RBA has decided to maintain the official cash rate at the record-low 0.1 per cent.
Thirty-four of the 35 economists and commentators on comparison site Finder predicted that rates would remain on hold.
AMP Capital chief economist Shane Oliver predicts the RBA will increase rates later this year.
“The economy is running stronger than expected, unemployment is likely to push below 4 per cent and this will drive an acceleration in wages growth to a 3 per cent greater pace in the second half - meeting the conditions for an RBA rate hike later this year,” Mr Oliver explained.
“The set back to growth from the Omicron wave is looking modest with new cases already slowing.”
Bendigo Bank head of economic and market research David Robertson also expects the RBA will lift rates this year.
“Strong employment data and demand for labour bodes well for wages growth in 2022, which should also drive core inflation higher,” said Mr Robertson.
“The RBA are still likely to increase rates later in the year, although August is now in view rather than November, assuming the Omicron wave subsides by the end of summer, helping tourism, hospitality and the services sector.”
BIS Oxford Economics principal economist Sean Langcake said there is less spare capacity in the labour market entering 2022 than the RBA had previously expected.
“Moreover, underlying inflation pressures are stronger, boosted by housing construction costs. Taken together, their rate hike cycle will be brought forward compared to their earlier guidance,” he said.
