//Preface//
The Australian Central Bank once again announced the hike of , the official cash rate of
rose by another 0.25%, and the pressure on loan users has soared!
inflation rate is believed to have improved...
Australian dollar exchange rate fell in the short term, and
is still at a low level!
#01:
The Australian Central Bank raised interest rates by 25 basis points
Inflation rate is still rising
Just now, the Australian Central Bank announced that the official cash rate of has been raised by 25 basis points again, and the interest rate hike has not stopped, and it is really going on every month.
This is also the sixth consecutive rate hike since May 2022, and the official cash rate of reached 2.60%.
Image source: RBA
This is also consistent with the predictions of financial institutions. As long as Australia's inflation rate does not drop, the RBA's interest rate hike will continue.
However, compared with the previous interest rate hikes, the RBA has slowed down the rate hikes this time.
Australia Bank Governor Philip Lowe said in his speech last month that although is necessary to further increase the cash interest rate, it is also necessary to slow down the speed and scale of interest rate hikes.
He pointed out that although the RBA does not have a pre-set route, it is committed to taking some necessary measures to bring Australia's inflation rate back.
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I know higher interest rates are unpopular for many people, but if higher inflation becomes the norm, it will be more difficult and will damage our economic outlook.
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And the RBA's interest rate hike once again means that the average monthly repayment of AUD 750,000 mortgage loans will increase by 222 AUD, and lenders will continue to fight against loan pressure.
Image source: news
Because of the current continued interest rate hikes, major Australian banks have different opinions on the extent of the Australian central bank's interest rate hikes.
West Pac believes that the Australian central bank will raise interest rates to 3.6% in February 2023, while ANZ predicts that will reach 3.35% in December this year. The forecasts of
Commonwealth and NAB are relatively conservative, believing that interest rates will rise to 2.85% by November this year.
#02:
Australian dollar exchange rate fluctuations
Rate hikes cause the exchange rate to fall in the short term
Every time the Australian Central Bank announces a rate hike, will affect the exchange rate to a certain extent .
A few days ago, the Australian dollar against RMB exchange rate plummeted, and two consecutive days of sharp plunge caused the exchange rate to fall directly to a low of 1:4.55.
Image source: Sina Finance
The exchange rate rose yesterday, but after the Australian central bank announced a rate hike, the Australian dollar against the RMB suddenly fell.
Image source: Sina Finance
As of press time, the exchange rate of Australians against the RMB remained at the level of 4.6068.
Image source: Sina Finance
In addition, the Australian dollar exchange rate also fell by 60 points in the short term.
As of press time, it stayed at the level of 0.6476.
Image source: Sina Finance
#03:
may raise interest rates to 4.1%
may cause economic recessionHouse prices plummet
financial markets expect Australia's official interest rate to reach 4.1% by mid-next year, prompting economists to warn that such a tightening monetary policy will put the country in recession and drop house prices by 30%.
Image source: The Age
Every time the Australian Central Bank raises interest rates, the real estate market will fluctuate. The most intuitive impact is that housing prices continue to fall.In the worst case, Australian house prices will continue to fall within three years, potentially falling 12.7% by 2023, 27.2% in 2024 and 43.5% in 2025, according to a simulation by economic research firm Digital Finance Analytics.
Image source: news
If this happens, it means that Sydney house price median will fall from the peak of AUD 1.41 million in 2022 to AUD 796,000, and plummet by 3 years.
and Melbourne house prices will fall to $565,000 in 2025, the lowest point in nearly a decade.
Image source: news
This worst case refers to the Australian central bank's cash interest rate rising to more than 4%, which means that the average mortgage interest rate will reach 7%. Based on the current inflation rate of 7%, Australians not only have to pay higher loans, but their cost of living expenses will also remain high.
And inflation and sluggish real estate will also cause Australians to stagnate their real wage growth.
Image source: news
Digital Finance Analytics CEO Martin North said that once this worst happens, it will be a terrifying disaster for Australia.
Now the financial industry generally predicts that The Australian Bank of Australia will raise interest rates to 4.1% in May 2023, and this situation will not improve until February 2024.
is very different from the previous market forecast that the interest rate hike will only continue until the end of this year and will start to slow down next year.
However, some institutions have predicted that this situation is unlikely to occur. What is closer to the real situation is that Australian housing prices are likely to fall by 8.8% by 2023, 17.1% by 2024, and 23.7% by 2025.
Digital Finance Analytics said that if the interest rate of is raised to 3.5% and there is no recession in Australia, the above situation is likely to occur.
Image source: news
Before interest rate expectations continued to rise, some of the world's most important central bank took action in the past 48 hours.
These countries include Swedish , the United States, South Africa and Switzerland , and 0.5 percentage points in the United Kingdom, 0.5 percentage points in the United Kingdom, 0.5 percentage points in the United Kingdom, 0.2 Norway , 0.2 Indonesia , and 0.2 Philippines .
In addition, RBA , New Zealand , ECB and Canada also raised interest rates earlier this month.
Oliver said that financial markets are paying close attention to Feder 's actions, and the Fed has sent out a signal to drag the world's largest economy into recession to eliminate inflationary pressure. But he believes that the local Australian market ignores the key differences between Australia and the U.S. economy.
Image source: The Age
Most Americans apply for a fixed interest rate of 30 years, but in Australia, people apply for mainly variable mortgage loans, or short-term fixed interest rates.
Meanwhile, Australia's household debt level is twice that of American home buyers.
"The Fed may be making a huge policy mistake. This does not mean that we must repeat the same mistake here."
Finally
Australia's inflation rate has reached 7%, and the Australian Central Bank has failed to achieve its effectiveness after hikes over multiple rates. In order to curb further increase in inflation rates, interest rate hikes will continue.
Every rate hike is a blow to Australian housing prices. It is not known when the rate hike will continue.
If the worst happens, the Australian real estate market may collapse... no one can bear such consequences!
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