The RBA has just released the latest inflation numbers for October where inflation dropped to 4.9%.
👉 Background: Inflation is one of the most popular words of 2023. It is the term used to describe the increased price of goods and services over a period of time. The target inflation rate for Australia is between 2-3%.
👉 What happened: Inflation in Australia jumped to 7.8% in December 2022, which was a major worry. But thankfully, the RBA has just released the latest inflation numbers for October where inflation dropped to 4.9%.
👉 What else: With 5 rate rises this year already, it’s fair to say that home owners are breathing a sigh of relief for the holiday period.
💡The Inflation rate isn't just an arbitrary number, it's the key indicators of the Australian economy. And, it's the main indicator that the Reserve Bank looks at and reacts to.
💡When inflation rises, the Reserve Bank will then often raise interest rates. The idea is to make mortgage repayments harder, investments less appealing, and therefore reduce spending overall.
💡In times of low inflation, the bank might lower interest rates to encourage spending and investments. But with inflation numbers coming in lower than expected for October, only 11% of experts reckon there will be a rate rise in December.
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