Two of the nation’s biggest lenders warn more mortgage pain is on the way, predicting the Reserve Bank will lift interest rates to almost 3 per cent by the end of the year in an aggressive bid to ease growing inflation pressures.
Westpac chief economist Bill Evans said he now expected the cash rate to reach 3.1 per cent by December and 3.35 per cent by February. The last time official interest rates were at 3 per cent or more was in 2013.
Governments around the world are struggling to deal with the political fallout from soaring inflation and the response of central banks, which have started tightening monetary policy. Commonwealth Bank economist Stephen Wu said prices for essentials including petrol and groceries would be the largest drivers of higher inflation.