I know you may already be aware that interest rates are likely to rise again in Australia, but did you know they may increase twice this year?
Economists have been revising their forecasts this week as global central banks start lifting rates to counter stubborn inflation, but some relief may be on the way.
Next week, there’ll be a rise to the age pension.
About 2.7 million people will see the increase from the upcoming round of indexation from 20 September.
Maximum rates for singles will increase by $36.80 a fortnight to $1,237.70.
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Couples, combined, will see a rise of $55.60 to $1,866.00 per fortnight.
They also include the pension and energy supplements.
There will also be upward adjustments for those who receive the Disability Support Pension.
Planning a trip overseas soon? Be prepared to pay more to fly
The Australian Competition and Consumer Commission (ACCC) warned this week that airfares will continue to climb as oil prices bounce higher and the war in the Middle East drags on.
In its Domestic Airline Competition in Australia report, it also revealed just how concentrated the market is locally.
Qantas Group, which also owns Jetstar, dominates with a 65.2 per cent share, Virgin Australia 33.3 per cent and Rex just 1.5 per cent.
“We’ll be watching closely,” ACCC chair Gina Cass-Gotlieb told me on the SBS On the Money podcast.
“We want to make sure they keep independently setting prices and independently make commercial decisions despite these challenging conditions.”
Cass-Gotlieb said that while airlines may navigate higher jet fuel prices by cutting capacity, which means fewer seats in the sky, relief might come in time as Sydney’s second airport comes online.
“What Western Sydney (International) will introduce is more available slots for take-off and landings and that can assist with new entrant airlines which we are hoping to see.”
WSI is scheduled to commence commercial passenger services in October.
If global central banks sneeze, will the RBA catch the same cold?
Well, the reality is the Reserve Bank was already lifting official interest rates earlier this year before many other global central banks, because Australia was experiencing inflationary pressures before the war in the Middle East started.
But now, global central banks have started addressing price pressures relating to higher oil prices by lifting interest rates.
Last week, the Bank of Japan boosted rates to a 31-year high, while the US Federal Reserve also moved higher for the first time in more than three years.
So while Australian interest rates don’t always move in tandem, economists say the world economy is now facing the same inflationary pressures.
Investment bank UBS became the latest to change its forecast and is now expecting two more RBA rate rises this year, taking the official cash rate to 4.8 per cent, with the first to come at the next meeting at the end of this month.
It blames three things: a change in tune from global central banks which are now lifting rates; higher oil prices stemming from the war in the Middle East; and large investments in artificial intelligence.
And while higher interest rates aren’t good for borrowers, it’ll benefit savers depending on just how aggressive the banks are to attract deposits.
Want more on the world of money and markets? The SBS On the Money podcast breaks down the latest every weekday. You can tune in here or wherever you get your podcasts.
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