SYDNEY (Reuters) – Australia’s central bank said on Wednesday that a rapid recovery in population growth was a big surprise for the bank’s economic forecasts, pushing up rents and leading to an earlier-than-expected stabilisation in housing prices after months of losses.
Speaking at an event in Perth, Marion Kohler, the Reserve Bank of Australia’s (RBA) head of economic analysis, said the drag on consumption from the housing downturn would be smaller than previously forecasted, now that prices have steadied in recent months.
“The faster recovery in the population could turn out to have unanticipated or more pervasive effects,” said Kohler, adding other macroeconomic indicators had been broadly as expected in the past three to six months.
The RBA is set to unveil its latest economic forecasts on Friday, after shocking markets by raising interest rates to a 11-year high of 3.85% earlier this week.
The RBA was confident that goods price inflation would moderate this year, Kohler said, but it expected the tight labour market and demand for services to fuel domestic inflationary pressures.
(Reporting by Stella Qiu; Editing by Jamie Freed)
