An expert economist has warned could head into a recession if inflation is not brought under control and interest rates are not increased.
Judo Bank chief economic adviser Warren Hogan warned the Reserve Bank of could raise interest rates this year in a blow to mortgage holders.
He said hadn’t increased rates as high as other countries and ‘that last little bit’ could get inflation and the cost-of-living crisis under control.
However, Mr Hogan was also weary of rates going too high and sending the economy free-falling into a recession.
An increase would be yet another hit for mortgage-holders after they were raised by 1.25 percentage points in 2023.
Mr Hogan predicted three more increases this year, in August, September and November.
That would see the Reserve Bank of cash rate climb from an existing 12-year high of 4.35 per cent to 5.1 per cent – a level unseen since 2008 during the Global Financial Crisis.
Interest rates in 2022 and 2023 have already increased at the fastest pace since 1989 – reaching 18 per cent in that year, and sparking a recession 18 months later by mid-1991.
Judo Bank chief economic adviser, Warren Hogan (pictured), has warned the RBA could raise interest rates throughout the year to try and get a hold on inflation and the cost-of-living crisis
Mr Hogan said hadn’t increased rates as high as other countries and ‘that last little bit’ could get inflation and the cost-of-living crisis 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.
‘We’re not looking at that this time, but we don’t want rates at six or seven (per cent),’ Mr Hogan said.
‘That’s going to really put us into a recession and do damage. This is all about mitigating that risk.’
He said the RBA would try to keep the economy on an ‘even kilter’ throughout the year, which could mean more rate increases.
‘The RBA is definitely not going to go next week, but that is the emerging risk that we could have to go one or two more times,’ Mr Bowen said.
Mr Bowen put pressure on the RBA (stock image) to not let inflation get out of hand as it could lead to rates drastically rising and send the economy into a recession
Mr Bowen warned the government not to ‘throw money’ at the economy in the upcoming May budget, adding they needed to stay ‘disciplined’.
‘You’re not going to get rid of this inflation when we’re creating 25,000 jobs a month this year so far,’ he said.
‘The cost of living is hurting everyone. And that’s what we’ve got to get rid of.’
The RBA opted to hold the cash rate at 4.35 per cent in March and will announce their next decision on May 7.
READ MORE: Why Aussies struggling with the cost of living crisis may have to wait longer for mortgage cuts
