Economics
Stretched Aussie Households Cast Doubt on Central Bank's Outlook
- Both household spending and saving slowed in third quarter
- Traders price in less than 20% chance of rate hike in 2019
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Australians’ reluctance to spend in the midst of a property slump is dragging on economic growth and casting doubt on the central bank’s outlook, making the prospect of an interest-rate hike even more distant.
The data are a blow to the Reserve Bank narrative of record-low interest rates fueling economic growth of around 3.5 percent this year and next to drive higher wages. It’s now contending with a less robust expansion at a time when house prices are dropping the most since the global financial crisis. That may prompt consumers to further rein in spending, as could a looming election.