‘Sharper, longer slowdown’ predicted for economy as fifth interest rate hike looms

AI desk brief

Australia’s economy is being downgraded to a “sharper, longer slowdown” as the RBA is set to deliver a fifth rate hike, taking the cash rate to its highest since 2008. Major bank economists now see growth around 1% next year, with unemployment potentially rising to 5.1%-5.4%, while Brent’s surge from about US$72/bbl in early July to above US$110 has worsened the inflation outlook and increased recession risk.

CBA and NAB both flagged a deeper slowdown driven partly by the extended Middle East conflict and higher oil prices, while AMP warned home prices could fall as much as 15% and said the chance of recession could rise to 45% if the RBA hikes as expected. The backdrop is structurally mixed for precious metals: softer growth and geopolitical oil shocks are supportive, but a more aggressive central bank and higher rates remain a near-term headwind.