The Reserve Bank of Australia’s decision on the cash rate will be the focus of attention

Australia’s homeowners may face higher monthly mortgage payments due to a potential 10th consecutive interest rate hike by the Reserve Bank, which is expected to increase the cash rate from 3.35% to 3.6%. The final outcome of this round of policy tightening is uncertain, with the market predicting a peak in the low fours while some economists predict one or two further increases. While both wage and growth data for the December quarter were weaker than expected, monthly consumer price index data is unpredictable, and Australian Treasurer Jim Chalmers estimates that inflation has hit its peak. St George economists suggest that the current economic outlook presents some challenges and policy tightening may add further pressure on households. However, they highlight the potential for economic growth as goods price inflation has lessened and evidence of a wage-price spiral is scarce. The RBA’s decision is expected to dominate an otherwise quiet week for economic data. The US economy showed signs of recovery as Wall Street rallied on Friday, while the Australian market finished in the red for the fourth consecutive week.