A surging domestic economy and rising inflation will see the Reserve Bank change its mind and increase interest rates as many as three times this year, analysts have warned.

Council of the City of Sydney

According to expert analysis, the Reserve Bank is anticipated to increase interest rates up to three times within the year due to a robust domestic economy and escalating inflation. Warren Hogan, who successfully predicted five rate hikes in the previous year, suggests the Reserve Bank's previous stance on halting rate increases has shifted. He now foresees hikes of 25 basis points in the months of August, September, and November, which would elevate the cash rate to 5.1%.

For individuals with a loan amounting to $500,000, the proposed rate increases would mean an additional $226 in monthly repayments, totaling $1,400 since the initiation of rate hikes in April of the previous year. Hogan contends that these adjustments could significantly impact numerous households, driven by persistent domestic inflation and a high number of job vacancies that suggest continuous employment and expenditure within the economy. Despite the economy's performance, he emphasizes the necessity for higher interest rates to combat inflation effectively.

While some experts align with Hogan's predictions, others believe the Reserve Bank might hold off on any rate adjustments in their upcoming meeting, possibly maintaining the current rates until the end of the year or early the following year before considering any cuts. The forthcoming federal election and its proximity add another layer of complexity to the Reserve Bank's independence in decision-making, with the federal government expected to distance itself from these decisions. The looming federal budget is poised as a significant test of economic management, with opposition voices critiquing the current administration's spending and taxation policies as inflationary.

In contrast, the federal government champions the stage three tax cuts, set to take effect on July 1, as a substantial measure for cost of living relief for millions of workers, emphasizing the urgency and potential of this tax relief to ease financial pressures on the population.



Reserve Bank set to raise interest rates, expert predicts

Warren Hogan correctly forecast five interest rate hikes last year, and he no longer believes the Reserve Bank is done. I expect to see at least two, probably three rate increases this year. He's now predicting rate rises of 25 basis points in August, September and November, taking the cash rate to 5.1%. For borrowers with a $500,000 loan, monthly repayments would go up $226. 1,400 more since the hike started in April last year. I think this could push a lot of households over the edge. The reason, he says, stubborn domestic inflation isn't coming down fast enough, and there's still a high number of job vacancies, meaning people are working and spending. The good news is the economy's doing well. The bad news is that probably means we need higher interest rates in order to get rid of inflation. I don't know if some of these economists are headline hunting for their consultancies. Others believe the RBA will consider another increase when it meets week after next. But ultimately, I think they'll leave rates on hold, probably out to the end of the year or maybe early next year, and then we'll start to see some cuts. And with the federal election due by May next year, you'll really hear the federal government distance itself from the decisions of the independent Reserve Bank. The opposition says the big test for economic management will be next month's federal budget. This is a big Labor government that loves to spend, loves to tax, and is putting upward pressure on inflation and interest rates. The federal government says the stage three tax cuts will be the biggest form of cost of living relief for millions of workers. I think that the tax relief, which is coming on 1 July, you know, can't get here quick enough. Chloe Boris for 10 News First.

Russian President Vladimir Putin has ordered tactical nuclear weapon drills as part of a military exercise to "deter" the West. It comes as Russian forces continue to make incremental gains on the ground, capturing two villages in Kharkiv and the Donetsk region, as well as the village of Soloviove in eastern Ukraine.

Soloviove

Ukraine Invasion

Russia advances in Ukraine's east, announces nuclear drills

Chinese President Xi Jinping awoke in Paris on Monday on his first visit to the region in five years, with trade and Russia's war with Ukraine on the agenda in talks with France's Emmanuel Macron and European Commission chief Ursula von der Leyen.

Paris

China's Xi Jinping pays state visit to France

Israel has ordered civilians in Rafah to move towards Khan Younis, in the clearest sign yet that a military operation is imminent. A ceasefire in Gaza looks as distant as ever with Hamas refusing to lay down arms unless there is a complete cessation of the war. Meanwhile, Benjamin Netanyahu said Israel would go it alone if necessary, even in the face of criticism from its Western allies.

Rafah

Israel-Gaza War

Israeli army orders Palestinians to evacuate parts of Rafah

The bodies Australian brothers, Jake and Callum Robinson have been identified by authorities in Baja California, Mexico. It comes as their grieving parents arrive in the country.

Brothers identified as victims of Mexico robbery

Qantas has been ordered to compensate passengers following revelations that it sold tickets on thousands of flights that had already been cancelled. The airline has agreed to pay a $100 million fine and $20 million in compensation to affected passengers.

Mascot

Qantas ordered to pay compensation over 'ghost flight' scandal

A former detective is facing allegations of sexually assaulting a 19-year-old woman whose case he was initially assigned to investigate. Accused of exploiting his authority, Glenn Coleman, 55, has been charged with 10 offences,

Penrith

Police officer accused of assaulting rape victim

The death toll from heavy rains that have caused flooding in Brazil's southern state of Rio Grande do Sul has risen to at least 78, local authorities said, with more than 115,000 people displaced.

State of Rio Grande do Sul

Climate Crisis

Death toll rises in record-breaking Brazil floods

China's President Xi Jinping has arrived in France for a rare visit with President Emmanuel Macron. They are set to discuss trade, amid growing tension between Europe and China over an imbalance between China's exports and European imports.

China's Xi Jinping visits Europe amid global tensions

While several pro-Palestinian campus protests in the U.S. were dismantled over the weekend, others became more disruptive and interrupted at least one graduation ceremony.

Chicago

Protests disrupt graduation ceremonies at U.S. universities

Prospects for a Gaza ceasefire appeared slim as Hamas reiterated its demand for an end to the war in exchange for the freeing of hostages, and Israeli Prime Minister Benjamin Netanyahu flatly ruled that out.

Tel Aviv-Yafo

Gaza truce hopes fade as Israel, Hamas trade blame

The Israeli cabinet has voted to unanimously shut down Al Jazeera's operations in the country. That's according to Prime Minister Benjamin Netanyahu in a statement on X. 
It is not clear when this decision will take effect.

Israel announces ban of Al Jazeera channel, website

Australian police said they have shot dead a boy after he stabbed a man in Western Australia's capital Perth, in an attack authorities said indicated terrorism.

Perth

Australian police shoot boy dead after stabbing

Sadiq Khan has been elected mayor of London, winning a historic third term after a dramatic contest. Khan was declared the winner over the Conservative candidate, Susan Hall with 43.8% of the vote.

London

Sadiq Khan elected London mayor for third term

Floods have killed at least 58 people in southern Brazil. Nearly 70,000 have been forced from their homes. Tens of thousands of people have been left without drinking water or electricity. It's the worst flooding the region has seen in more than 80 years.

'It's going to get worse': Brazil braces for flood peaks

Students at the University of California in Irvine say they will remain on campus until all their demands are met. School officials say they'll continue to negotiate with the protesters -- and are hoping to reach a deal soon.

Irvine

Police, protesters in stand-off at California university

The Federal Government will cut $3 billion in student debts, in measures to be announced in next week's budget. The reforms will see the student loans of three million graduates by an average of $1200 and changes to loan indexation.

Camperdown

Labor to wipe $3 billion of student debts

Mexican authorities have charged three suspects over the disappearance of Australian brothers Callum and Jake Robinson and their American friend Jack Carter Rhoad. It's believed the tourists became embroiled in a bungled robbery. Four bodies were found near the trio's abandoned campsite, but are yet to be formally identified.

Baja California

Mexican authorities lay charges over Australian brothers' disappearance

A knife-wielding teenage boy has been shot dead by police in Bunnings carpark in Willetton, Perth. The 16-year-old boy had phoned Triple Zero saying he planned ‘acts of violence’ and stabbed a male member of the public. The WA Police Commissioner says the teenager had ‘mental health and radicalisation issues’.

Willetton

Police shoot dead ‘radicalised’ teenage boy in Perth

The death toll from rains in Brazil's southernmost state of Rio Grande do Sul rose to 57, local authorities said on Saturday (May 4) afternoon, while dozens still have not been accounted for.

Dozens missing amid record-breaking Brazil flooding

There are renewed hopes for a ceasefire in Gaza after a Hamas delegation arrived in Cairo to continue talks amid reports of a proposal agreed to by Israel to halt fighting for an initial 40 days in exchange for the release of hostages.

Hopes rise for Gaza ceasefire amid Hamas talks

Students showing support for Palestinians have set up camp outside the University College London. They say they'll continue their protest until the university divests from Israeli institutions that 'profit from the war in Gaza'.

Pro-Palestine university protests spread to London

Dozens of Palestinians have held a demonstration in the West Bank, to condemn the killing of five Palestinian fighters. Crowds rallied hours after Israeli troops attacked the fighters in the village of Deir al Ghoson.

Jerusalem

Five Palestinian fighters killed during West Bank raid

Dozens of people in two rubber dinghies have reached the southern coast of England, the latest among thousands of asylum-seeking migrants to make the risky sea crossing from France this year.

Dover

Asylum seekers arrive in England despite Rwanda threat

A former immigration detainee has been bailed after allegedly threatening police with a knife in Melbourne. It follows the recent violent home invasion allegedly committed by another released detainee in Western Australia Pressure is mounting on Federal Immigration Minister Andrew Giles to be held to account.

Canberra

Pressure mounts on Immigration Minister after latest detainee incident

Mexican authorities have reportedly discovered a fourth body near the cliff site where Perth brothers Jake and Callum Robinson disappeared, along with their American friend Jack Carter Rhoad. The Australian family of the brothers are en route to Mexico. The bodies are yet to be formally identified.

Ensenada

Fourth body discovered in Mexico search for Australian brothers

Ukraine is eagerly waiting for Western aid as Russia racks up more victories on the battlefield. Meanwhile, British Foreign Secretary David Cameron on a visit to Kyiv gave Ukraine the go-ahead to use British weapons to strike directly at Russia.

Kyiv

U.K. allows its weapons to be used on Russian soil

Canadian police have charged three Indian men with the murder of Sikh separatist leader Hardeep Singh Nijjar last year and said they were probing whether the men had ties to the Indian government.

Surrey

Canada police charge three with murder of Sikh leader

China has launched an uncrewed spacecraft on a nearly two-month mission to retrieve rocks and soil from the far side of the moon, the first country to make such an ambitious attempt.

Wenchang

China launches mission to far side of the moon

Britain's opposition Labour Party won a parliamentary seat in northern England on Friday (May 3) and control of several councils, inflicting heavy losses on the governing Conservatives to pile more pressure on Prime Minister Rishi Sunak.

U.K.'s Labour claims big early win over Conservatives

Turkey has announced that it is halting trade with Israel, worth $7 billion a year, until a permanent ceasefire and humanitarian aid are secured in Gaza. Israel denounced the decision as breaking trade agreements.