{"id":27477,"date":"2026-11-02T07:08:27","date_gmt":"2026-11-02T07:08:27","guid":{"rendered":"https:\/\/globalnewstoday.uk\/index.php\/2026\/11\/02\/sharper-longer-slowdown-predicted-for-economy-as-fifth-interest-rate-hike-looms-the-guardian\/"},"modified":"2026-11-02T07:08:27","modified_gmt":"2026-11-02T07:08:27","slug":"sharper-longer-slowdown-predicted-for-economy-as-fifth-interest-rate-hike-looms-the-guardian","status":"publish","type":"post","link":"https:\/\/globalnewstoday.uk\/index.php\/2026\/11\/02\/sharper-longer-slowdown-predicted-for-economy-as-fifth-interest-rate-hike-looms-the-guardian\/","title":{"rendered":"\u2018Sharper, longer slowdown\u2019 predicted for economy as fifth interest rate hike looms – The Guardian"},"content":{"rendered":"

Australia\u2019s central bank expected to hit mortgage holders again on Tuesday, as war in Middle East combines with collapsing house prices
Australia\u2019s economy is set for a \u201csharper, longer slowdown\u201d, major bank economists say, as the Reserve Bank is forced to keep interest rates higher to rid the nation of persistent inflationary pressures.
The RBA is widely expected to hit mortgage holders with a fifth rate hike on Tuesday, in a move that will push the cash rate to its highest since 2008 amid rising worries the economy could even be tipped into recession.
Belinda Allen, the head of Australian economics at CBA, said the extended Middle East conflict, collapsing house prices and a more aggressive central bank would drive real GDP down to just 1% by the middle of next year, nearly half the previous estimate of 1.8%.
Growth through 2027 would be barely stronger at an estimated 1.1%, according to the updated projections.
Allen said she had expected to see \u201csigns of economic recovery\u201d by the New Year, but now sees the economy \u201cbottoming deeper and later\u201d.
This more pessimistic outlook was \u201cmainly given oil has been a lot higher than we had been expecting,\u201d she said.
\u201cMost people thought we would see a resolution to the Middle East conflict by now and oil [prices] looking more normal. Alas, that has not been the case.\u201d
Instead, Brent crude, the global oil price benchmark, has surged from about $US72 a barrel in early July, to back above $US110 in recent days as the conflict broadens and hopes for a peace deal in the near future have all but disappeared.
After Jim Chalmers<\/a> last month warned the December mid-year budget update would show a more pessimistic economic outlook, analysts at NAB also revealed a major downgrade to their forecasts.
Gareth Spence, the bank\u2019s head of Australian economics, said \u201cunemployment might need to rise higher than we thought\u201d in order to get inflation back under control \u2013 a view he said reflected recent comments by top RBA officials.
The economy would grow below trend over 2027 and 2028, Spence said, echoing the forecast of just 1% growth next year.
Spence forecast the key jobless measure would need to rise from 4.7% to as high as 5.4% by the end of next year, as the RBA doubles down on its battle to regain control of inflation.
The CBA forecast was more optimistic, seeing unemployment peak at 5.1% over the same timeframe.
Either way, the RBA\u2019s multi-year strategy of bringing inflation to heel without sacrificing post-Covid employment gains now looks unlikely to be achieved.
As union leaders protested the anticipated rate hike in front of the RBA\u2019s offices in Sydney on Monday morning, Spence said the risk was that the central bank would have to hike again.
The deteriorating economic outlook comes as new data showed Australia\u2019s property slump remained on track to be one of the deepest on record.
Shane Oliver, AMP\u2019s chief economist, said home prices could fall by as much as 15% before levelling off late next year, with Sydney property values already down by 10% from their recent peak.
Drawing from RBA research, Oliver said a property correction of that magnitude could deliver a substantial hit to the economy, as worried homeowners pull back on spending \u2013 a phenomenon known as the \u201cwealth effect\u201d.
A weakening property market will also weigh on homebuilding, Oliver said, adding to the multiplying pressures on the economy.
While an economic contraction was not his \u201cbase case\u201d, he warned there was a \u201csignificant and rising\u201d risk of recession, the chance of which would rise to as high as 45% should the RBA hike as expected on Tuesday.
\u201cWe don\u2019t know the tipping point.\u201d<\/p>\n

source<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Australia\u2019s central bank expected to hit mortgage holders again on Tuesday, as war in Middle East combines with collapsing house pricesAustralia\u2019s economy is set for a \u201csharper, longer slowdown\u201d, major bank economists say, as the Reserve Bank is forced to keep interest rates higher to rid the nation of persistent inflationary pressures.The RBA is widely […]<\/p>\n","protected":false},"author":1,"featured_media":27478,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-27477","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"_links":{"self":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/posts\/27477","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/comments?post=27477"}],"version-history":[{"count":0,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/posts\/27477\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/media\/27478"}],"wp:attachment":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/media?parent=27477"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/categories?post=27477"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/tags?post=27477"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}