RBA on pause but why does the market think there are more hikes on the cards?

In this episode of our podcast, we dive into the intriguing topic of the RBA's decision to pause interest rates and explore why the market believes there are more hikes on the horizon. We begin by explaining what real rates are and what they mean for the Property market. We examine how the RBA utilises real rates to control the economy. We explore how negative real rates are used during economic slowdowns (such as the pandemic and the GFC) and their impact on consumers and businesses. We also discuss positive real rates in hot economies and their effects on consumers and businesses. Moving on, we delve into how real rates affect the Australian property market. Drawing a comparison with the US, where real rates are positive, we explore the RBA's dilemma of negative real rates, which are more stimulatory than the US. We discuss the factors influencing real rates and their implications for mortgages in Australia compared to the US. Lastly, we touch on recent property auctions and how prices have not skyrocketed, with some instances even falling below expectations. Join us as we unravel the complex relationship between real rates, the RBA's monetary policy decisions, and their impact on the economy and the Australian property market.