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We’re not heading into a recession but RBA faces a new test

The Australian Financial Review (AFR) •
November 03, 2026 • 06:00 PM
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An investment boom makes a recession less likely, but it complicates the RBA’s inflation task by competing for stretched worker and construction capacity.

We’re not heading into a recession but RBA faces a new test

The Reserve Bank’s decision to lift the cash rate to 4.85 per cent , its fifth quarter-point increase this year, will intensify fears that Australia is heading for recession.

The monetary tightening will deepen the squeeze on heavily mortgaged households. It will weigh further on house prices and discretionary spending and lift the incentive to save. Residential construction, real estate agents, furniture stores and white goods retailers will feel it.

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