In a word Yes. Why? Because put simply, far too many of us have been spending like drunken sailors and as a result of this it has forced the Reserve Bank to act to try and slow things down.
But wait there’s more in store.
Following on from the comments by the RBA earlier this week on inflation they are still pretty nervous about our voracious appetites for spending and debt. From their statistics they have seen the underlying inflation rate has rise to 3% a figure which is well out of their comfort zone Hence they are quite prepared to pull the interest rate lever one more time to slow things down. Will this hurt you bet! Think about it. You just can't party forever without getting a hangover!
Oh but wait there’s even more in store!
You may have heard about the fallout in the US sub prime lending market. Well how this will affect you will be by way of yes you got it. Another interest rate rise. How could this be? Well some lenders here in Australia source some of their money to lend out from overseas. Hence they now pay more so will you in the form of a higher interest rate. So if you have a loan with a non bank lender, be prepared for a potential extra hike! If you have a loan with a traditional bank don’t think for one moment you are safe. Lenders being lenders will raise their rates also as a preventative measure. In other words there will be a bit of a credit squeeze. Exactly what the Reserve Bank wants. Why? Because it will slow things down.
