The chief of one of Australia’s largest commercial banks warned strength of the nation’s economy suggests that markets and home owners should brace for “a lot more rate rises.”
The comments from Australia & New Zealand Banking Group Ltd. (ANZ) Chief Executive Officer Shayne Elliot in local newspapers come ahead of an interest rate decision by the central bank on February 7.
The overwhelming majority of economists surveyed by Bloomberg project a 25 basis points hike to 3.35% in the Reserve Bank of Australia’s (RBA) benchmark rate. Money markets pricing suggest it will peak mid-year after another increase of similar size.
“The economy is in really robust shape and actually households are in much better shape than people think,” the Australian newspaper cited Elliott as saying at an event in Adelaide. “There are probably going to be more rate rises than people think,” he said.
A separate story in the Saturday Telegraph newspaper described RBA Governor Philip Lowe as a “dead man walking,” with little prospect of being reappointed for another term in the top job.
Lowe’s previous guidance that he didn’t expect to raise rates until 2024 wrong-footed many borrowers last year when inflationary pressures proved too strong and he led the RBA to rapidly lift the benchmark from a record low of 0.1%.
Deputy Governor Michele Bullock would be a potential candidate for the top job,
according to the report.
Australian yields have tumbled with traders there readying for next week’s central bank meeting, while New Zealand bonds rallied and their Japanese counterparts edged higher.