Figures released from the Reserve Bank of Australia (RBA) indicate that more interest rate pain might be on the horizon for mortgage holders.
The underlying rate of inflation reached 0.7 percent last quarter pushing the annualised rate up to 3.4 percent. This is above the annual inflation rate of 2 to 3 percent targeted by the Reserve Bank. The figures point to an almost certain increase in interest rates when the RBA releases its Statement of Monetary Policy this week.
Upward pressure on inflation last quarter was impacted by travel and accomodation, house prices, and discretionary items such as clothing and appliances. Downward pressure was applied by petrol prices and lower spending on household technological items such as televisions and gaming consoles.
The RBA will be keen to reign in inflation before a bubble in the housing market begins to form. With much of the developed world still lagging behind Australia in recovering from the recession care must be taken to ensure that exports are not negatively affected by too strong a recovery.
This does not paint a pleasant picture for home owners with variable rate mortgages, however, who may be forced to endure a fourth straight rate rise.
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