Australia could be in for two more interest rate hikes if it\u2019s to bring inflation back to manageable levels, according to Westpac\u2019s senior economist Matthew Hassan. Despite inflation dropping to 3.8% by December, recent signs point to continued financial pressure on households. With consumer sentiment slipping and household spending declining, it seems like the Reserve Bank of Australia (RBA) will need to tighten the purse strings even more.<\/p>\n\n\n\n
The latest economic report from Westpac<\/a> highlighted a 2.6% drop in consumer sentiment, following the RBA\u2019s recent interest rate hike. While the decline in sentiment wasn\u2019t as severe as in past hikes, the impact is still notable. Hassan points out that the drop in consumer confidence reflects growing concerns about the financial strain many Australians are facing as they try to balance higher interest rates with the cost of living.<\/p>\n\n\n\n Hassan also pointed out that Australia\u2019s inflation\u2014though lower than it was during the height of the pandemic\u2014still presents a significant problem, reports Sky News<\/a>. To bring inflation back down to the target range of 2-3%, the RBA will likely need to implement two additional rate hikes. He explained that while inflation has improved somewhat from last year\u2019s highs, it is still stubbornly above the RBA\u2019s target, requiring continued efforts to slow down the economy.<\/p>\n\n\n\n