Economists Warn RBA’s August Rate Hike May Trigger Recession – Sydney Auction Clearance Rate at 69%

Week’s Key Focus

Economists caution that a potential rate hike by the Reserve Bank of Australia (RBA) in August could push the economy into recession as households struggle with rising living costs. A new report from Deloitte Access Economics suggests that without the federal government’s stage 3 tax cuts, the economy might face a recession within the next year. The Australian Bureau of Statistics is set to release June quarter inflation figures next week, crucial for the RBA’s decision.

Deloitte’s chief economist Pradeep Philip expressed concerns about a hasty rate hike undermining the cautious recovery underway. Krishna Bhimavarapu from State Street Global Advisors also believes an August rate hike would be a mistake, citing cooling labor markets and weak household spending.

The Deloitte report also references New Zealand’s experience, where higher rates led to a technical recession without quickly taming inflation. Philip stated that New Zealand’s experience shows that merely raising rates is insufficient to control inflation and serves as a lesson for the RBA.

Treasurer Jim Chalmers emphasized the government’s responsible economic plan, stating that households would struggle more without effective management.

Sources

Brisbane Times
Sydney Morning Herald

Rouse Hill

Don’t Miss Out! Premium Registered Land in Rouse Hill, Sydney’s Northwest – Prices Starting at AUD $2400 per Square Meter

Auction Results Last Week

Sydney: 696 properties were auctioned, with results reported for 421; 292 were sold. The clearance rate was 69%, with total auction value of AUD 380,796,626 and a median house price of AUD1,577,500.
Melbourne: 813 properties went to auction, with results reported for 535; 338 were sold. The clearance rate was 63%, with total auction value of AUD 289,116,376 and a median house price of AUD 950,000.