Kathrine Frich
Keeping up with monthly bills feels like an endless marathon.
Families everywhere are desperate to catch their breath and find some financial relief.
Unfortunately, the latest signals from top money experts suggest that the finish line is still a long way off.
The knight stays away
According to the Australian Associated Press cited by Canberra times, economists firmly believe the Reserve Bank of Australia will keep the official cash rate locked at 4.35 percent.
Borrowers will likely feel relieved that another immediate increase is off the table. But they should not expect a sudden rescue.
HSBC chief economist Paul Bloxham explained that central banks usually step in as saviours when the economy slumps.
He noted that unemployment is rising rapidly. Even so, the expert warned that struggling mortgage holders will probably wait until at least 2027 for any real rate relief.
Slaying the dragon
Bloxham stated that the board must avoid repeating past mistakes by cutting rates before inflation is fully controlled.
“We expect the board to judge that now is the time to pause, but that the fight may not be over yet,” he wrote in a recent research note.
He added that the central bank simply cannot afford to drop its guard.
“The knight will need to remain armed and vigilant. No returning with good news of a slayed dragon and cutting the cash rate quite yet,” Bloxham stated.
Looking for clues
Financial markets largely agree with the pause. Traders are now keeping a close eye on the finer details.
IG market analyst Tony Sycamore told the Australian Associated Press that recent underlying inflation numbers were slightly better than feared.
Because a hold is practically guaranteed, all attention will shift to the upcoming press conference with governor Michele Bullock.
Even without a new hike, the financial pain is severe. Families with massive mortgages are paying hundreds of dollars more every month than they did before the hikes started.
Businesses feel the squeeze
Homeowners are not the only ones struggling to balance their budgets in this harsh environment.
CreditorWatch chief economist Ivan Colhoun revealed that late payments among businesses have recently hit a massive six-year high.
He argued that recent wage increases were “irresponsibly large” and will only complicate the ongoing battle against inflation.
Sources: Australian Associated Press
