Why some economists are concerned for Australian households in 2023
The Reserve Bank of Australia has signalled more rate rises could be needed to fight inflationary pressures, but it’s hoped some reprieve is on the way in the new year.
The board will meet again in February, with some economists predicting rates could rise once more before borrowers can expect the rate to stay steady.
Today the RBA announced a rise of 25 basis points, meaning the official cash rate is 3.1 per cent.
It’s the highest in 10 years.
AMP Capital senior economist Diana Mousina said she was surprised by some of the commentary.
“I thought their commentary today might have been signalling a willingness to pause in early 2023, but unfortunately we didn’t really get that,” she told Neil Breen.
For the ordinary Australian household with an average mortgage of around $500,000 on a variable rate, there’s been an annual increase of around $11,000 this year.
“I am quite concerned by the outlook for consumers,” Ms Mousina explained.
“I think we have been very sheltered this year from all these rate rises because we still have a lot of exuberance after COVID, we are excited about being able to travel, we still have savings from the pandemic, but all of that is starting to unwind and it is looking like a bad year for consumer spending in 2023.”
Press PLAY below to hear what she predicts for next year