{"id":331,"date":"2023-09-18T08:24:05","date_gmt":"2023-09-18T08:24:05","guid":{"rendered":"https:\/\/justimaginefinance.com.au\/?p=331"},"modified":"2025-07-15T03:04:08","modified_gmt":"2025-07-15T03:04:08","slug":"is-this-the-end-of-interest-rate-rises","status":"publish","type":"post","link":"https:\/\/justimaginefinance.com.au\/?p=331","title":{"rendered":"Is this the end of interest rate rises?"},"content":{"rendered":"<p>In August, the Reserve Bank of Australia (RBA) left the country\u2019s official interest rate unchanged at 4.10% to give the central bank more time to assess the state of the economy.<\/p>\n<p>This is the second straight month there\u2019s been a pause, the longest break since the RBA started raising rates in May 2022.<\/p>\n<p>During this time, there have been 400 basis points worth of tightening, marking one of the fastest hiking cycles on record as the central bank acts to tame inflation.<\/p>\n<p><span class=\"\"><br \/>\nHigher interest rates appear to be having their intended effect and slowing the economy, with the <\/span><a href=\"https:\/\/www.abs.gov.au\/media-centre\/media-releases\/cpi-rose-08-cent-june-2023-quarter\" target=\"_blank\" rel=\"noopener\">Australian Bureau of Statistic\u2019s most recent consumer price index<\/a><span class=\"\"> showing annual inflation eased to 6.0% in the June quarter from 7% in the March quarter.\u00a0<\/span><\/p>\n<p>Sadly, though, that\u2019s still more than double the RBA\u2019s target range of between 2-3%.<\/p>\n<p>As such, i<a href=\"https:\/\/www.rba.gov.au\/media-releases\/2023\/mr-23-19.html\" target=\"_blank\" rel=\"noopener\">n the statement accompanying the decision<\/a>, RBA governor Dr Philip Lowe left the door open for more interest rate hikes.<\/p>\n<p>\u201cSome further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve,\u201d he said.<\/p>\n<p>\u201cThe board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.\u201d<\/p>\n<p>The RBA\u2019s next move will be down: Westpac<\/p>\n<p>Despite Dr Lowe\u2019s warning, a growing number of economists believe we\u2019ve reached the peak of the tightening cycle \u2013 including three of the four major banks (see PropTrack table below).<\/p>\n<p><img decoding=\"async\" id=\"1834609934\" class=\"\" src=\"https:\/\/lirp.cdn-website.com\/332ef82e\/dms3rep\/multi\/opt\/JIF+August+blog+image-1920w.png\" alt=\"\" width=\"1012\" height=\"390\" data-dm-image-path=\"https:\/\/irp.cdn-website.com\/332ef82e\/dms3rep\/multi\/JIF+August+blog+image.png\" \/><\/p>\n<p><span class=\"\">Westpac chief economist Bill Evans said that he expects the <\/span><a href=\"https:\/\/www.westpaciq.com.au\/economics\/2023\/07\/RBA-note-1-august-2023\" target=\"_blank\" rel=\"noopener\">RBA\u2019s next move to be down<\/a><span class=\"\"> \u2013 though slightly later than originally forecast.\u00a0<\/span><\/p>\n<p>\u201cThe next challenge for the outlook should now be the timing for the beginning of the easing cycle. When Westpac was forecasting rate hikes in both August and September we were comfortable with the cycle beginning in the June quarter of 2024,\u201d he said.<\/p>\n<p>&nbsp;<\/p>\n<p>\u201cThat timing now looks more likely to be in the September quarter 2024 when we expect the unemployment rate to be nearing 5% and inflation in the 3\u20133.5% range.\u201d<\/p>\n<p>Commonwealth Bank and NAB have also pencilled in cuts for next year.<\/p>\n<p>What does this mean for the property market?<\/p>\n<p><span class=\"\"><br \/>\nNo one knows for sure if we\u2019re out of the woods yet as that, ultimately, depends on how the economic data plays out in the coming months. That said, if we\u2019re not at the peak, it\u2019s likely we\u2019re very close \u2013 with Dr Lowe recently telling the <\/span><a href=\"https:\/\/www.abc.net.au\/news\/2023-08-11\/philip-lowe-says-the-worst-is-over-for-interest-rate-increases\/102717476\" target=\"_blank\" rel=\"noopener\">House of Representatives standing committee the \u201cworst is over\u201d.<\/a><\/p>\n<p><a href=\"https:\/\/www.corelogic.com.au\/news-research\/news\/2023\/steady-rates-and-easing-inflation-should-provide-boost-to-consumer-sentiment\" target=\"_blank\" rel=\"noopener\"><br \/>\nCoreLogic executive research director Tim Lawless<\/a><span class=\"\"> believes that, in turn, is restoring confidence to the property market as consumers see the light at the end of the tunnel.\u00a0 <\/span><\/p>\n<p>\u201cConsumer confidence and housing activity go hand in hand. Generally, when sentiment is low, home sales are low and vice versa; so, any lift in sentiment is likely to be accompanied by a rise in active buyers and sellers,\u201d he said.<\/p>\n<p><span class=\"\"><br \/>\nWhat\u2019s more, <\/span><a href=\"https:\/\/www.corelogic.com.au\/news-research\/news\/2023\/corelogic-home-value-index-national-home-values-up-0.6-in-march,-breaking-a-10-month-streak-of-falls\" target=\"_blank\" rel=\"noopener\">national home values have been rising since March<\/a>, despite higher interest rates as a supply\/demand imbalance puts upwards pressure on prices.<\/p>\n<p><a href=\"https:\/\/justimaginefinance.com.au\/property-prices-forecast-to-continue-rising\" target=\"_blank\" rel=\"noopener\"><br \/>\nMany commentators and economists predict the rebound<\/a> will continue, including major banks NAB and Westpac.\u00a0<a href=\"https:\/\/www.westpaciq.com.au\/economics\/2023\/08\/aus-housing-finance-declines-slow-3-april-20231\" target=\"_blank\" rel=\"noopener\">Westpac has tipped national price growth of 7% for 2023<\/a><span class=\"\">, while <\/span><a href=\"https:\/\/business.nab.com.au\/nab-quarterly-residential-property-survey-q2-2023\/\" target=\"_blank\" rel=\"noopener\">NAB is forecasting annual growth of 4.7%.\u00a0<\/a><\/p>\n<p><span class=\"\"><br \/>\nWhether you\u2019re buying your first or second home to live in or rent out, Just Imagine Finance can help you get the right home loan. To discuss your options, contact us on <\/span><a href=\"mailto:catherine@justimaginefinance.com.au\" target=\"_blank\" rel=\"noopener\" type=\"email\">catherine@justimaginefinance.com.au<\/a>\u00a0 or 0414 673 359.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In August, the Reserve Bank of Australia (RBA) left the country\u2019s official interest rate unchanged at 4.10% to give the&hellip; <a class=\"more-link\" href=\"https:\/\/justimaginefinance.com.au\/?p=331\">Continue reading <span class=\"screen-reader-text\">Is this the end of interest rate rises?<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-331","post","type-post","status-publish","format-standard","hentry","category-uncategorized","entry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Is this the end of interest rate rises? 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