Inflation = Home Loan Rate Rise

Inflation data due out at the end of this month will ultimately dictate whether or not the RBA lifts rates

At a component level, this is expected to be driven by solid growth in rents, utilities and property charges, and from a broader perspective, by solid growth in aggregate demand.

These figures suggest a rate move in November highly probable.

Obviously the CPI is not the only factor that is important in a rates decision. The Reserve Bank does not consider a particular inflation reading to be a so-called trigger point. Instead, it watches a range of indicators to determine policy moves. Still, the CPI carries a high weight in this decision process.

I am expecting  the RBA will also be keeping a watchful eye on developments in the housing market and the exchange rate, when making its decision on interest rates next month.

Another indicator is the potential threat of additional moves by commercial banks. This has so far mostly been posturing, but it is clear that an expected additional move by the banks would be a factor in the RBA’s thinking.

I am thinking as a mortgage holder my luck is running out and the rate rise is coming!


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