This month’s home loan interest rate rise puts Logan residents in a tough spot, but at least it’s happening now, said Bank of Queensland chief economist Peter Munckton.
Only last month the nation drew a sigh of relief after the RBA announced a rate-hike hold; although pressure remained, the burden many households felt was reduced.
But this month, despite economists’ predictions, the RBA lifted the interest rate from 3.6 to 3.85 per cent – marking the 11th increase in the last year.
Mr Munckton said it was an uncomfortable situation to be in, but Logan was better prepared now for an increase than it had been historically, largely because of its decreasing unemployment rate.
“The jobs market in Logan, like in most areas, is as strong as we’ve seen for years,” Mr Munckton said.
“I think you have to go back to the greatness of the mining boom years to sort of see something similar.
“So that’s a really good starting point – if you’ve got a job, or you have the ability to get a job, then all of a sudden there’s a lot more options available.”
He said another positive for Logan residents was peak inflation was in the “rearview mirror”.
“There’s good reason to think that inflation will keep coming down, so some of the problems that people are facing right now -the high cost of food is an example – will become slightly easier,” he said.
Mr Munckton said it was important to lower inflation while the employment rate was high, and to do it sooner rather than later.
“… the people least able to deal with [high inflation] are the poorest.”
Last month, right after the RBA announced the rate pause, MyCityLogan spoke to Bendigo Bank’s chief economist David Robertson.
Mr Robertson said he was “hopeful that we’re in for a prolonged pause, but I certainly can’t rule out one more hike.”
Now, following an increase, Mr Robertson said the RBA was walking a fine line.
“[The Reserve Bank has] increased rates for an 11th time, and really, what they’re saying is they’d like to see inflation come back down to their two-to-three per cent target band in a shorter timeframe,” Mr Robertson said.
“Their argument is that if they hadn’t put up rates, it would take too long to get inflation back down.”
But they run the risk of pushing too hard, Mr Robertson said.
“I think they’re walking a very fine line between appropriate monetary policy tightening… and pushing too hard,” he said.
“Time will tell.”
