Will the RBA boost the pain factor? Analysts split on chances of a further rate hike

With inflation down slightly, RBA watchers are divided on the likelihood of Philip Lowe announcing a further rate hike. <i>P

With inflation down slightly, RBA watchers are divided on the likelihood of Philip Lowe announcing a further rate hike. P Photo: TND

Mortgage holders will be holding their breath this week as the Reserve Bank mulls whether inflict a further rate rise on home owners in its April cash rate decision.

In the event the RBA pulls the trigger on another 25 basis point hike, RateCity analysis shows the average borrower with a $500,000 loan could soon be paying a total of $1059 more a month on their mortgage compared to May last year.

Ten increases in a row have added hundreds of dollars to the cost of servicing a home loan and there are now early signs households are reining in their spending in response.

While painful, the slowdown in consumer spending will be viewed by the central bank as evidence its strategy is working to counteract high inflation and give its board confidence to end the tightening cycle sometime soon.

Both a halt and another 25 basis point hike will both be live options come Tuesday and economists are undecided on the likely outcome.

More than a third of 42 experts polled by comparison site Finder expect the RBA to hold fire.

The remaining 62 per cent anticipate one or more hikes.

Cooler-than-expected monthly inflation data – coming in at 6.8 per cent in the 12 months to February – and moderating retail spending has fuelled the case for a pause.

On the other hand, the jobs report revealed persistent strength in the labour market and surveys pointed to resilience in the business sphere.

RBA governor Philip Lowe will front the media on Wednesday at the National Press Club in Sydney, where he is certain to face questions on his aggressive interest rate hikes as well as the future of the RBA after an independent review wrapped up last week.

On Thursday, the RBA will release its financial stability review, which will shed some light on the health of the Australian banking system amid concerns of financial instability overseas.

But before the show begins on Tuesday, the Australian Bureau of Statistics will kick off the week with fresh building approvals and lending data on Monday.

And on Thursday, the bureau will also release international trade data.

Meanwhile, Wall Street rallied more than one per cent and the Nasdaq notched its biggest quarterly percentage gain in almost three years on Friday as signs of cooling US inflation bolster hopes its Federal Reserve might soon end its aggressive interest rate hikes.

The Dow Jones Industrial Average closed up 415.12 points, or 1.26 per cent, to 33,274.15, the S&P 500 gained 58.48 points, or 1.44 per cent, to 4,109.31 and the Nasdaq Composite added 208.44 points, or 1.74 per cent, to 12,221.91.

Australian futures rose 45 points, or 0.62 per cent, to 11,154.

The benchmark S&P/ASX200 finished Friday up 55.5 points, or 0.78 per cent, to 7,177.8, while the All Ordinaries rose 60.9 points, or 0.83 per cent, to 7,373.3.

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