Interest Rate Nightmare: Experts Warn of NO More Cuts as Cost of Living Pain Intensifies – With a Shocking 3.7% Inflation Forecast
- Reserve Bank’s latest forecast reveals a devastating 3.7% inflation rate, outpacing wage growth and crippling household budgets
- Experts warn of NO more interest rate cuts, with some even predicting a rate HIKE as early as 2027
- Australians face a prolonged period of cost of living pain, with the RBA’s economic growth forecast offering little comfort
In a dire warning to Australian households, the Reserve Bank’s latest quarterly Statement on Monetary Policy has revealed a devastating 3.7% inflation forecast, outpacing wage growth and crippling household budgets. The news has sparked fears of a prolonged period of cost of living pain, with experts warning of NO more interest rate cuts.
The RBA’s forecast predicts Australia’s economy will continue to grow at a modest 2% per annum, driven by a surge in housing investment. However, this growth is expected to be offset by a stagnant wage growth forecast, leaving households to bear the brunt of rising costs.
“The latest inflation figure was notably higher than expected,” the RBA warned, adding that “there could be a little more underlying inflationary pressure than we previously thought”. This bleak assessment has sparked concerns among economists, with many now tipping NO more interest rate cuts.
HSBC’s Paul Bloxham is one of the experts warning of a rate hike on the horizon. “We think the next move is up, but we think the RBA is now going to have a long period where it remains steady,” he said. “So, we’ve got them on hold through next year, 2026, and rate rises pencilled in for 2027.”
The news is a devastating blow to Australian households, already struggling to make ends meet. With the RBA’s economic growth forecast offering little comfort, many are bracing themselves for a prolonged period of cost of living pain.
In a rare glimmer of hope, the RBA noted that competition between banks has seen “spreads” on variable-rate mortgages fall to about 0.65 of a percentage point below pre-pandemic levels. However, this is unlikely to provide much comfort to households facing a devastating 3.7% inflation forecast.
As the cost of living crisis deepens, Australians are being forced to tighten their belts and prepare for the worst. With NO more interest rate cuts on the horizon, households are facing a nightmare scenario – and it’s far from over.