Russia’s invasion of Ukraine is more likely to lead to a quick increase in interest rates in 2022, with even a small increase raising borrowing costs by $45 a month.
President’s ban Vladimir PutinThe U.S. authoritarian regime has already pushed average unleaded prices to a record above $2 a liter, adding to the current high inflation pressure in australia
West Texas Last week, the intermediate crude oil price climbed above US$130 a barrel for the first time since July 2008 and ComSec predicted motorists to pay an average of $2.50 a liter for regularly unleaded in the “coming weeks”. is of.
with petrol A key production cost component of most goods, Reserve Bank of Australia Governor Philip Lowe said Russia’s war raised the prospect of interest rate hikes in 2022.
Russia’s invasion of Ukraine more likely to raise interest rates early in 2022, says Reserve Bank
“The Russian invasion of Ukraine over the past few weeks has driven up commodity prices across the board – higher prices for energy, for base metals and for many agricultural products as well,” he said at the Banking 2022 conference.
“Given these developments, it is possible that interest rates will increase this year. It is not a guarantee but it is commendable.
Motormouth data shows average capital city petrol prices have risen above $2 a liter for the first time.
Sydney’s average regular unleaded price was 216.5ca liter on Monday, with Melbourne 212.5ca liter.
Motorists in Brisbane were typically paying 218.3ca liter in comparison to 220c liter in Adelaide, 208.7ca liter in Perth, 219.9ca liter in Hobart, 206.4ca liter in Darwin and 208.6ca liter in Canberra.
In June 2008, just before the global financial crisis, daily average prices reached a record high of 212.9ca litres, when prices were adjusted for inflation 14 years earlier.
Ryan Feldsman, senior economist at Comsek, said a prolonged Russian war in Ukraine could, on average, push petrol prices in the capital city up to $2.50 a liter.
“Australian retail unleaded petrol prices are hitting record highs, and national pump prices could rise to $2.50 a liter in the coming weeks if Russia’s ‘special military operation’ in Ukraine is prolonged or intensified,” he said. is,” he said.
‘All pump prices are at or near record highs today.’
Ryan Felsman, senior economist at Comsek, said that in a prolonged Russian-led war, on average, petrol prices in the capital city could reach $2.50 a liter, with capital city prices now exceeding $2 a liter (pictured in Melbourne). There is a service station)
With petrol a key production cost component of most commodities, Reserve Bank of Australia Governor Philip Lowe said Russia’s war raised the prospect of an interest rate hike in 2022.
In late February, as Russia invaded Ukraine, average petrol prices in Sydney, Melbourne, Brisbane, Adelaide and Perth peaked at 182.4ca litres, then the highest retail price since 2014, adjusted for inflation, on Monday. New Australian Competition and Consumer Commission data released.
Before the invasion, Russia was the world’s third largest producer of crude oil, after Saudi Arabia and the United States.
‘Russia’s invasion of Ukraine and OPEC cartel’s refusal to boost crude production, combined with improving oil demand as countries ease COVID-19 restrictions, international refined petrol in Australia’s five largest cities and reduced the February prices to eight-eight for both the average retail petrol. Year high,’ the ACCC said.
Last year, average retail petrol prices increased by 41.4ca liter or 34 per cent.
The Commonwealth Bank, Australia’s largest domestic lender, is forecasting a rate hike in June for the first time since November 2010. Even a small increase of 0.15 percentage points, taking the cash rate to 0.25 per cent, would see borrowers with a typical loan. Pay another $45 a month on their mortgage payment (pictured is an auction bidder in Paddington, east of Sydney)
Australia’s headline inflation rate, also known as the consumer price index, also rose to 3.5 per cent in 2021, well above the Reserve Bank’s target of 2 to 3 per cent.
During 2021, Dr Lowe has repeatedly promised that the cash rate would be capped at a record-low of 0.1 per cent by 2024 ‘at the earliest’.
But now central banks are concerned about “high pressure” on major supply-side prices as the Russian invasion of Ukraine continues.
He said, ‘We had a big supply shock because of Kovid and now we have got another shock because of Ukraine.
‘Essentially, this is going to keep CPI inflation in Australia higher than otherwise – it’s going to be higher around the world.’
High inflation means the Reserve Bank will have to act to contain price pressures, which means pain for home borrowers.
In February, Australia’s average asset price stood at $728,034, CoreLogic data showed.
With a 20 percent deposit, a borrower of $582,427 pays the bank $2,269 each month at a 2.39 percent variable loan rate.
Australia’s largest domestic lender Commonwealth Bank has forecast a rate hike in June for the first time since November 2010.
Even a small increase of 0.15 percentage points, taking the cash rate down to 0.25 percent, would cost borrowers another $45 a month on their mortgage repayment compared with a typical loan.
Financial markets are preparing to raise the cash rate nine-fold to 2.25 percent by July 2023, which will see the cost of borrowing on average households rise by $700 compared to current levels.