Australia Faces ‘Sharper, Longer Slowdown’ as RBA Prepares Fifth Rate Hike

Australia’s economy is heading for a “sharper, longer slowdown,” according to major bank economists, as the Reserve Bank of Australia (RBA) is expected to raise interest rates for a fifth time on Tuesday. The move would push the cash rate to its highest level since 2008, intensifying pressure on mortgage holders amid persistent inflation. The central bank’s decision comes as the war in the Middle East adds to global economic uncertainty, while domestic house prices continue to fall. Economists warn the combination of higher borrowing costs and declining asset values could tip the economy into recession. The RBA’s aggressive tightening reflects its struggle to bring inflation back to target, but the risk is that overtightening deepens the downturn. With households already squeezed by cost-of-living pressures, another rate hike could further dampen consumer spending and business investment. The outlook remains fragile, and all eyes are on the RBA’s next move to balance inflation control with economic stability.