Inflation is not falling fast enough to prevent central banks in Australia and the northern hemisphere from continuing to raise interest rates despite an increasing risk of recession, economic data this week is expected to show.
Inflation may be slowing around the world, but the market is tipping further interest rate increases.But high rents and a spike in insurance costs could dampen the extent of the slowdown. At the Commonwealth Bank, economist Stephen Wu forecasts inflation to slow to 6.2 per cent. The other three major banks are more optimistic, with National Australia Bank expecting a 5.9 per cent CPI figure, ANZ forecasting 6 per cent and Westpac economists tipping 6.1 per cent.to 4.1 per cent and indicated further increases to suppress still-elevated price pressures.
Last week, money markets projected a peak rate above 4.6 per cent but have since trimmed their aggressive rate path due to concerns about an economic downturn.
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