The official RBA interest rate is likely to remain unchanged
throughout 2022.
Australia’s economy is still operating below its potential with economic
growth and wages growth not strong enough to justify an interest rate increase.
Remember, current interest rates are at stimulatory levels and the
Reserve Bank will only raise interest rates once these low rates have done
their job and once the economy is bounding along and wages growth has remained
strong for some time.
Currently, the positive signs of jobs creation, falling unemployment,
and rises in full-time employment are being offset by slow wages growth; and if
200,000+ more skilled immigrants arrive in Australia as planned by the
government, this will help fill the job vacancies and dampen wages growth.
However, I would not be surprised to see banks raising interest rates
"out of cycle” as their cost of funds increases, as has already happened with
many fixed interest rates over the last year.
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Jason Gwerder
Friday, 10 December 2021
