‘Sharper, longer slowdown’ predicted for Australian economy as fifth interest rate hike looms
News Source
•Mon, 02 Nov 2026 06:57:29 GMT
📰 What Happened
Australia's central bank is expected to raise interest rates for the fifth time on Tuesday. That would push the cash rate to its highest level since 2008.
CBA, one of the big four banks, now expects the economy to grow just 1 percent by the middle of next year. That is almost half its earlier forecast of 1.8 percent. Growth in 2027 is forecast at only 1.1 percent.
NAB thinks unemployment may need to rise from 4.7 percent to 5.4 percent to bring inflation down.
🔍 The Backstory
The Reserve Bank has been fighting stubborn inflation for years. Higher rates make mortgages and loans more expensive, which is meant to slow spending and cool prices. The war in the Middle East has pushed oil from about 72 dollars a barrel in July to above 110 dollars.
Australian house prices are also falling. AMP's chief economist says values could drop 15 percent, with Sydney already down 10 percent. He puts the chance of recession at up to 45 percent if rates rise again.
🎯 Why It Matters
A rate rise hits mortgage holders within weeks. It also cools hiring and spending, which is why economists warn the slowdown could last longer than expected.
Australia's central bank is expected to raise interest rates for the fifth time on Tuesday. That would push the cash rate to its highest level since 2008.
CBA, one of the big four banks, now expects the economy to grow just 1 percent by the middle of next year. That is almost half its earlier forecast of 1.8 percent. Growth in 2027 is forecast at only 1.1 percent.
NAB thinks unemployment may need to rise from 4.7 percent to 5.4 percent to bring inflation down.
The Reserve Bank has been fighting stubborn inflation for years. Higher rates make mortgages and loans more expensive, which is meant to slow spending and cool prices. The war in the Middle East has pushed oil from about 72 dollars a barrel in July to above 110 dollars.
Australian house prices are also falling. AMP's chief economist says values could drop 15 percent, with Sydney already down 10 percent. He puts the chance of recession at up to 45 percent if rates rise again.
A rate rise hits mortgage holders within weeks. It also cools hiring and spending, which is why economists warn the slowdown could last longer than expected.