Reserve Bank rate rises likely to end in November, Westpac predicts

Summarised from 2 outlets · Updated 14 Nov, 04:13 · Archive

Westpac expects November could be the last interest rate rise from Australia's Reserve Bank.

The Reserve Bank of Australia may have nearly finished raising interest rates. Westpac chief economist Luci Ellis, who spent more than 30 years at the central bank, expects November's rate hike will be the final one of the tightening cycle. 'It was already our view that the RBA was likely done hiking the cash rate after the November increase,' Ms Ellis wrote. 'Since then, our conviction on that call has strengthened.'

The official cash rate has risen from 3.60 per cent to 4.85 per cent – its highest level in 18 years – across five of the last seven meetings, including on Melbourne Cup Day. RBA governor Michele Bullock warned the fifth rate hike would 'feel like a recession.'

Ms Ellis acknowledged a rate hike in February 2027 cannot be ruled out entirely, but said it is becoming increasingly unlikely. She said such a rise would require either a new inflation shock or would constitute 'a policy error on the part of the RBA.' Westpac's outlook rests on expectations that inflation will fall back into the target range of 2 to 3 per cent by late 2027.

The rate outlook comes as a deepening housing downturn and weakening consumer spending crack the national economy.

Reserve Bank rate rises likely to end in November, Westpac predicts — Image: The West Australian

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How it is being reported

Mortgage holders spared further rate pain as housing downturn and spending slowdown hitOne of Australia’s leading economists, who worked at the Reserve Bank for more than 30 years, has made a big call on the next rate rise and the economy.The West Australian · 14 Nov, 03:38
Mortgage holders spared further rate pain as housing downturn and spending slowdown hitOne of Australia’s leading economists, who worked at the Reserve Bank for more than 30 years, has made a big call on the next rate rise and the economy.Perth Now · 14 Nov, 03:38

In this story: Reserve Bank of Australia · Westpac · Luci Ellis · Michele Bullock · Australia

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