The next three months will see a rocky ride for anyone investing, making money or saving in Australia. But it’s not all bad news.
For a start, inflation is on the horizon: rents, food and other essentials are soaring – wages are on the up, but not as fast as inflation – already up 3.5 per cent.
Interest rises that are all but locked in for the year, meaning mortgage rates will go up and borrowing will be more difficult
If you want to know what Matt Comyn, CEO of Commonwealth Bank thinks, his money (literally) is on the first rise in the 0.1 per cent cash rate in June, and a cash rate of 1 per cent by the end of 2022.
Note to self – lock in mortgage rate now!
And finally, there is an election coming – most think May, the last month the Morrison government can go to the people. At present, he is on the nose – but the Budget in March is expected to see all manner of goodies to tempt voters to return to the Liberal and national Coalition.
In all of this, Australians looking for a safe course need to be at their most cautious. But that doesn’t mean you should do nothing.
Bankers are actually very upbeat – the Commonwealth Bank delivered a $4.7 billion profit last week and suggested unemployment would fall to record lows. Tick!
Even the usually reserved Reserve Bank thinks 2022 is going to be a bumper year, with wage growth at last and a jobs boom thanks to the lack of foreign workers in the system. Tick!
Add to that Australians have $250 billion in savings – yes, you heard right – and borrowers are ahead in paying off loans like mortgages. And foreign tourists are back. Tick! Tick!
So suddenly banks stocks, the staple of our exchange, are looking good. NAB has the most to gain with a strong loans book.
On top of that, inflation will boost the price of Australia’s commodities sector – making our economy strong.
Time to think about investments…read on!