Advertisement
Rate hike calls are reaching screaming levels. Goldman has pivoted.
- Housing Price Collapse: Australian capital-city prices down 4.6% from March peak, projected 15% decline in Sydney/Melbourne by mid-2027 (largest downturn on record), triggering 130bp drag on consumer spending growth and pressuring GDP via negative wealth effects.
- RBA Policy Timing Shift: Base case for November cash rate hike to 4.60% (45% probability for September), with further tightening limited by housing downturn; housing decline (9% peak-to-trough) directly constrains policy flexibility.
- CPI Surprise & Inflation Pressure: July CPI rose +0.5% MoM (3mth +1.2%), 20bp above consensus, driven by elevated housing and services inflation (market services ex-travel +50bp→+0.8% MoM), lifting Q3 2026 inflation estimate to +0.93% qq.
- Revised Economic Forecasts: Lowered 2026 GDP growth (-10bp to 1.9%) and 2027 GDP (-30bp to 1.8%), with unemployment forecast rising to 4.8% in 2027, directly tied to housing-driven consumption weakness.
It’s worse than that, says Bloxo at HSBC.
Advertisement
The full text of this article is available to MacroBusiness subscribers
Cancel at any time through our billing provider, Stripe
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
Advertisement