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$vuetify.icons.faPhone1300 650 620

Rate increase unnecessary

Media release

Rate increase unnecessary

Media release
“The core leading indicators of building approvals, lending and consumer confidence all demonstrate that economic growth is set to slow in 2024,” stated HIA’s Chief Economist, Tim Reardon.

“Each of these indicators of future economic activity are falling or around, some of their lowest level in decades. 

“The fastest increase in the cash rate in a generation is the primary cause of these poor results in indicators of future growth. 

“The RBA’s monetary policy tightening is yet to adversely impact the lagging indicators of economic activity like unemployment or inflation. 

“There were very long lags in this cycle due to the strength of the economy at the start of the RBA’s rate rising cycle in the first half of 2022. 

“Today’s rate rise is unnecessary and will cause further contraction in new home building, constraining the supply of new homes.

“The impact of strong population growth on the national economy and home building cannot be overstated. 

“It is helping restore government finances, sustaining retail activity and addressing shortages of skilled workers and it will support new home starts over the course of the decade. 

“But strong migration is also obscuring the adverse impact of rising interest rates on key economic data, such as GDP, retail expenditure and house prices. 

“Stable and reliable migration has been a cornerstone of Australia’s economic growth. This has been disrupted by two years without migration and then two years of catch up.

“This disruption to migration is now distorting the RBA’s decision making. 

“A return to stable business conditions cannot be achieved by sending the building industry through boom-and-bust cycles. 

“The RBA should have waited for the full impact of their decisions to date emerge in 2024 before adjusting rates again,” concluded Mr Reardon.

For more information please contact:

Tim Reardon

Chief Economist

Thomas Devitt

Economist
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