-- Australian inflation is being driven by climate change, geopolitical shocks and government policies — factors typically beyond the Reserve Bank’s control. Yet economists still anticipate it will have to respond with monetary tightening as soon as next week.In a sign that pressures in at least one of these sectors are here to stay, figures released Wednesday showed Australian home prices advanced for an eighth straight month in October while rental vacancies hit a fresh record low.
That’s why McIntyre is among a small group that sees the central bank pausing at 4.1% for a fifth straight meeting on Nov. 7. “It seems unlikely that these conditions will change any time soon given population growth, the lack of significant new housing supply and the overall strong demand for rentals,” said Cameron Kusher, director of economic research at REA Group’s PropTrack Pty Ltd. division.Economists at UBS Group AG say record population growth is expected to add 0.25-0.5 percentage points to CPI in the near-term, while former RBA official Luci Ellis said it is boosting aggregate consumer demand.
Treasurer Jim Chalmers warned that government funding for disaster recovery had blown out by 433% over the past three years, ahead of a potentially disastrous wildfire season in the coming summer. An International Monetary Fund report on Wednesday found that soaring rents, electricity and insurance prices are why services inflation has proved so sticky in Australia, calling on the RBA to do more to curb price pressures.
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