Expert economist shares dire warning no Aussie wants to hear: ‘That’s going to put us into a recession’
An expert economist has warned Australia could enter a recession if inflation is not brought under control and interest rates are not raised.
Judo Bank chief economic adviser Warren Hogan warned the Reserve Bank of Australia could raise interest rates this year, which would be a blow to mortgage holders.
He said Australia had not raised interest rates as high as other countries and that “that last bit” could bring inflation and the cost of living crisis under control.
However, Mr. Hogan was also fed up with interest rates rising too high, sending the economy into freefall into recession.
An increase would be another blow to mortgage holders, after they were increased by 1.25 percent in 2023 and are expected to rise a further three times this year.
Judo Bank’s chief economic adviser, Warren Hogan (pictured), has warned that the RBA could raise interest rates throughout the year to try to control inflation and the cost of living
Mr Hogan said Australia has not raised interest rates as high as other countries and that “that last bit” could get inflation and the cost of living under control (stock image)
Speaking to Channel Nine’s Today on Monday morning, Mr Hogan said the economy was performing well but could “get away from us” and send inflation soaring.
That scenario could see interest rates rise dramatically from 4.35 percent to levels similar to those in 1988-89, when they reached 17.5 percent.
“We’re not looking at that this time, but we don’t want rates of six or seven percent,” Mr. Hogan said.
‘That will really put us into a recession and cause damage. It’s about mitigating that risk.’
He said the RBA would try to keep the economy in balance throughout the year, which could lead to more rate hikes.
“The RBA is certainly not going to go ahead next week, but that is the emerging risk that we may have to go one or two more times,” Mr Bowen said.
Mr Bowen put pressure on the RBA (stock image) not to let inflation get out of control as this could lead to interest rates rising dramatically and the economy falling into recession.
Bowen warned the government against “throwing money at the economy” in the upcoming May budget, adding that they must remain “disciplined.”
“You’re not going to get rid of this inflation if we create 25,000 jobs a month so far this year,” he said.
“The cost of living hurts everyone. And that’s what we have to get away from.’
The RBA has opted to keep the cash rate at 4.35 percent in March and will announce their next decision on May 7.