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As we approach Melbourne Cup Day, the Reserve Bank of Australia finds itself at a crossroads regarding interest rates. Contrary to expectations of a concluding chapter in interest rate hikes, recent developments suggest an ongoing saga.

In the latest RBA minutes, the central bank sketched a timeline for the return of inflation to its coveted 2% to 3% target band—December 2025, a horizon extending beyond two years.

The surge in world oil prices due to the Middle East conflict has injected uncertainty, prompting deliberations on potential further interest rate hikes to combat inflation.'

In her inaugural board meeting, RBA Governor Michele Bullock delivered a surprisingly hawkish tone, emphasising a "low tolerance for a slower return of inflation to target than currently expected." This hints at meticulous evaluations of factors such as upcoming inflation figures, the job market, and household spending before the RBA unveils its decision.

Strength Amidst Rate Increases: Labour Market Insights Despite the rise in interest rates, Australia's jobless rate is on a downward trajectory. September witnessed a dip in the unemployment rate to 3.6%, with NSW leading with the lowest rate.

The Australian Bureau of Statistics (ABS) highlighted positive shifts, stating, "The fall in the unemployment rate in September mainly reflected a higher proportion of people moving from being unemployed to not in the labour force."

While there was a marginal decline in hours worked, job vacancies persist at levels 69% above pre-pandemic figures, indicating robustness in the labour market.

RBA's 'Low Tolerance' and Market Dynamics The RBA's October minutes unveiled a "low tolerance" for a delayed return to its inflation target band. Acknowledging challenges in the Chinese economy and potential ramifications for Australia's growth, the central bank also recognised that escalating house prices could amplify consumption beyond projections.

"The board has a low tolerance for a slower return of inflation to target than currently expected," emphasized the minutes.

With Melbourne Cup Day on the horizon, the RBA's decision hinges on incoming data and its implications for the economic outlook. The central bank remains steadfast in its commitment to restoring inflation to its target within a reasonable timeframe.

Positive Auction Outcomes Amid Listings Surge Over the weekend, auction markets reported commendable and steady clearance rates despite a surge in auction numbers. Adelaide emerged with the highest clearance rate at 73.9%, while other capitals reported rates such as Melbourne - 69.8%, Brisbane - 66.3%, Sydney - 72.7%, and Canberra - 61.0%.

Despite the upswing in auction listings, the national clearance rate reached 68.7%, surpassing the previous weekend. Elevated spring listing numbers present opportunities for sellers, while buyers benefit from a wider array of homes and diminished competition.

Stay tuned for further updates on the RBA's decision and unfolding trends in the property market.

For ongoing insights and updates on the property market, follow @dmcpropertyadvisory


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