Australia Today Update: Inflation numbers have prompted leading economists to revise their view on where interest rates are going ahead of the Reserve Bank's next meeting on Tuesday

Higher than expected. inflation numbers have prompted leading economists to revise their read on wherever interest rates square measure going previous the Reserve Bank's next meeting on Tues. Across the board, they're more pessimistic than they were believing. The only way is up.

It's almost off. Racing for the Melbourne Cup Carnival. But for our Reserve Bank, cup day will mean a different kind of race to halt an inflation rate that's hit a higher-than-expected seven 3%. That small increment, I think, has led many economists to revise their inflation forecasts and also their interest rate forecasts. In fact, we've done the same thing.

While most are expecting a quarter of a percent hike on Tuesday, Westpac believes the Reserve Bank will lift rates by half a percent. Then. With the official interest rate now at two 6%, CBA and Amp have the cash rate peaking at three 1% before the Reserve Bank hits pause. NAB has it hitting three 6% by March. While both Westpac and ANZ are forecasting 385 percent by mid-next year.

The average owner Occupier. We estimate if the cash rate hits three eight 5%. That they could potentially be paying over six and a half percent on their home loan if they don't handle or. Refinance taking the 385 percent cash rate forecast. That would mean the average variable borrower with a $750,000 home loan will be paying an extra $1,589 per month from when the RBA started increasing rates in May.

And that, economists, believe, will have the desired effect of squeezing household spending power. And then, hopefully, as inflation starts to ease, it gives us a hint of what interest rates might do towards the end of next year.

The feeding rates will hit a peak before pausing for a few months before heading down again. We were thinking that rate cuts would start to happen at the end of next year. The most likely scenario is the Reserve Bank now won't start cutting interest rates until early 2024.

One area where the rate rises are biting already Sydney house prices falling at their fastest pace in decades, according to Domain, the upper end leading the downturn with the northern beaches, inner city, and west hardest hit. Even so, house prices in Sydney still remain $326,000 above what they were Prepandemic.