ASX Ended Down, Economists Forecast Interest Rates To Pick Up

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The ASX 200 ended the first day of December down 0.7 per cent at 7,301, following a slight lead of Wall Street. And economists are seeing indicators that the Reserve Bank of Australia (RBA) is gearing up to increase rates yet again.

1 December closed, seeing many falls in the real estate, education and energy sectors. The top five falls for this day were Corporate Travel Management, dropping 5.9 per cent, IPH by 5.2 per cent, Charter Hall by 5.1 per cent, Coronado Global Resources by 4.3 per cent and the Goodman Group by 4.1 per cent.

However, other markets gained, particularly gold miners such as St Barbara, going up by 10.4 per cent, Capricorn Metals by 8.1 per cent, Silver Lake Resources by 7 per cent and Ramelius by 4.8 per cent.

Gareth Aird, head of Australian economics for The Commonwealth Bank (CBA), noted that the bank is sticking with its 0.25 per cent forecasted rate increase. CBA further added that it doesn’t foresee a more considerable rate hike, and there is a slim chance the RBA would keep its benchmark rate at 2.85 per cent.

Aird stated, “We expect that at the December board meeting, the discussion will be between raising the cash rate by 25 basis points or leaving policy on hold. We do not anticipate that the board will discuss the case to raise the cash rate by 50 basis points.”

HSBC chief economist Paul Bloxham forecasts that the RBA may still deliver a rate hike but feels that this may be the last for the year. Bloxham noted that the tight job market and high inflation might drive the increase.

“Our expectation is that local growth will slow further over coming months, pressure in the jobs market will start to ease, the global growth backdrop will worsen, and global disinflation will become clearer,” the chief economist added.

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