Deloitte Access Economics report argues a return to monetary tightening would wipe out benefits of tax cuts and wage gains
A further rise in interest rates would put Australia’s economic recovery at risk and wipe out the benefits of tax cuts and real wage gains, economists have argued as key decisions loom.
A benign readout could lead to the Reserve Bank board holding rates steady again when it meets in August, but an upside inflation surprise could force its hand to lift rates again, they said in their“Any further increase in interest rates cannot be justified, and would just pull the rug out from under a cautious economic recovery,” Smith said.
Judo Bank’s Warren Hogan, Coolabah Capital’s Christopher Joye and the ANU’s Stephen Hamilton have all argued the RBA has undercooked the cash rate, pointing to sticky inflation and persistently high employment. He expected the economy to grow by just 1% in 2024 and argued other factors were contributing to inflation, such as a housing shortage pushing up rents.There are plenty of economists who agree the case for rate rises has passed.
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