On April 18, Stephen Smith, a partner at Deloitte Economic Consulting, said that the two 25 basis point interest rate hikes in February and March were “unnecessary” and that Australia “faces the worst pandemic since the recession in the early 1990s.” The weakest economic growth rate outside of the
Deloitte’s view is that the RBA has put the economy “on the knife’s edge” in the rate hike cycle and should have paused earlier rather than in April.
Deloitte says the RBA has – and is – pushing monetary policy forward, taking too much money out of household bank accounts.
That prompted Deloitte to further downgrade its forecast for Australia’s economic growth.
“This downward revision is largely concentrated in households, which now forecast a ‘consumption recession’ in 2023, with household spending expected to be lower than it was at the start of the year.”
However, Deloitte did not predict that the Australian economy will fall into recession.