UDIA WA were delighted to hear the thoughts and insights from economic guru Jonathan Pain during our first Industry Luncheon for 2022 last Friday, wherein he detailed the necessity for a return to normality this year.

With WA’s borders set to reopen on Thursday 3 March, it will be the first time since the start of the pandemic when life and travel between all States within Australia will be back to a form of normality with quarantine-free travel once again permitted.

Mr Pain said we now need to see more normality in the fiscal markets as he predicted at least four interest rate rises this year, following in the footsteps of the US Central Bank which he suggested could see as many as seven interest rate rises.

“We are moving back to something closer to normal, and I feel that the normalisation of monetary policy is what’s next,” Mr Pain said. “And already we see the US Central Bank basically indicating that they’re about to raise interest rates for the first time in a long time in March.

“Jerome Powell, the Federal Chair is going to be very aggressive in raising rates in 2022 and the Federal Reserve Board could potentially raise rates up to seven times this year. I think we can take it almost for granted, it will be five interest rate hikes in the US in 2022.”

Following this expected rise, Mr Pain said financial markets globally would have to recalibrate and reset as they embrace and understand the normalisation of monetary policy.

“If we’re seeing a normalisation in the economy here in Australia, I think that warrants a more normal monetary policy and the Reserve Bank will certainly raise rates this year,” he said. “The time for multiple rate increases will be 2023.

“That means higher short term interest rates, and I think significantly higher in the next 24 months in the United States, and also here in Australia.”

Despite the potential of ‘significantly higher’ interest rates on the horizon, Mr Pain was optimistic about Australia’s prospects based on the way the country has adapted with the pandemic to date.

“Looking forward I remain confident, as I have been for the last couple of decades, that Australia will perform well, in the medium to long term. Yes, we’re going to have some pain in the short term with regard to having to adjust to higher interest rates, but bigger picture, longer term, Australia is well placed.”

Following Jonathan’s introductory speech he was joined by three expert panellists for what was an extremely insightful and very timely Q&A session with Kaylene Gulich, CEO at the Western Australian Treasury Corporation, Steven Rowley, Director at Australian Housing and Urban Research Institute (AHURI) and Grant Dusting, Director of Strategy at McCrindle, each providing their own perspective on the current situation.

A big thanks goes to our Industry Partner Harvey Norman Commercial Division, Technology Partner nbn™ Australia, Event Sponsors Mirvac and CLE Town Planning + Design and our Networking Partner JDSi Consulting Engineers for supporting this event!