The RBA is set to decide on interest rates today and on the weight of evidence relating to inflation prospects, rates will be pushed higher. Data out yesterday confirmed that the manufacturing and real estate sectors are still booming.
Real estate data showed that established house prices across the country have increased by 20% in the past year with Melbourne’s prices up 28%, outstripping Sydney where prices were up 21%. Additional reports yesterday show that the Australian manufacturing growth for April accelerated at the fastest pace since 2002, according to the share business exchange. The performance of the manufacturing index jumped 9.3 points from March to 59.8 which is the highest level since May 2002. A figure above 50 shows the industry is expanding.
The resurgent manufacturing growth and booming house prices support the central bank’s view that the nation’s economy is expanding at or close to “trend.” Therefore the RBA is set to raise interest rates a further 0.25% to 4.5%, raise borrowing costs yet again.
By Michael Hevern
Head of Research
Tags: inflation, interest rates, RBA, Real estate
[...] RBA Set to Raise Rates (4.5%); [...]