When the Reserve Bank of Australia board surprised most people by raising interest rates on Tuesday, governor Philip Lowe wanted to give households and financial markets a psychological shock.CoreLogic reported that national dwelling prices had risen for a second consecutive monthPhilip Lowe, governor of the Reserve Bank of Australia, at the central bank’s board dinner in Perth on Tuesday.
“Unfortunately, this increase is the increase we had to have” says Lucas, chief executive of The Agency Group and a former CEO of McGrath Real Estate.why the RBA decided to increase interest rates by a quarter point to 3.85 per cent on Tuesday. For the RBA, that remains the case. But the inflation-targeting central bank was concerned that rising house prices would add to inflation pressures and make it harder to return inflation to its 2 per cent to 3 per cent target band in a “reasonable” time frame by mid-2025.
Bond traders who indirectly help set these fixed rate home loans and had priced almost zero chance of a rate rise on Tuesday won’t be so dovish about the RBA in the future.
Source: Financial Digest (financialdigest.net)
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