As you probably would’ve heard the RBA has decided to increase the cash rate target by 50 basis points to 85 basis points.
- Inflation is lower than in most other advanced economies
- Global factors; COVID Supply chain issues & Russia / Ukraine War
- Domestic Factors; tight labor market, demand for labor due to flood repair work on east coast
- Inflation is expected to increase further in short term, but decline back to 2-3% next year
- Short term impacts; electricity and fuel prices. Commodity prices are settling but still expect moderate increases, uncertainty around effect of Russia/Ukraine on agricultural commodities.
- The RBA expects further steps to be taken over coming months, but dependant on data.
- Domestic property prices have fallen slightly, still higher than pre-pandemic
- Household savings rate remains higher than pre-pandemic
- Many households have built up large financial buffers