Rates set to remain unchanged, but will we see a hike in 2018?

Georgie Hay

Georgie Hay

( 1 min read )

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Christmas is not likely to bolster the Reserve Bank this month, with the official cash rate set to remain unchanged at 1.50 per cent on Tuesday.

RateCity’s analysis of 24 economic indicators (see bottom) has revealed a still-sluggish economy with no imminent signs of improvement.

If there was any doubt, the usually reserved RBA governor Philip Lowe spelt it out in a recent speech saying, “there is not a strong case for a near-term adjustment in monetary policy”.

RateCity money editor Sally Tindall said the household debt-to-income ratio, which is at a record high of 193.7 per cent, was weighing heavily on the RBA’s mind.

“Property prices might be softening, but a large number of Australians are carrying unreasonable levels of debt,” she said.

“We need to see some genuine growth in wages before households become robust enough to withstand a rate hike.

“Right now, it’s hard the see how people are getting ahead.

“While we won’t see a rate hike in the short term, if inflation starts to grow in the first half of next year, we may see a tightening of monetary policy before 2018 is out.”


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