Have interest rates peaked?

After the third interest rate rise this year, the big question borrowers are entitled to ask is “Have interest rates peaked yet?” Some timely clues may come as early as Monday's quarterly statement on monetary policy from the Reserve Bank, which could offer the first indications of whether the next move in rates is likely to be up or down. Some signs are there for a slowdown in growth next year and an easing of inflationary pressures, but it all depends on how the RBA reads these economic tea leaves.

One the key pointers to inflationary pressures and higher interest rates has been the booming jobs market. News that the unemployment rate edged down to 4.6 per cent in October overshadows the fact that total employment actually fell during the month (but was more than offset by a fall in the participation rate). This was the first monthly fall of any substance this year, which is surprising given the volatile month to month movements in job numbers. This long overdue dip is unlikely to be the start of a downward trend in the jobs market, but the solid growth can't go on forever either.

Housing finance figures show that the housing sector is one area of the economy that is responding to interest rate increases. Both the number and value of loan commitments struck by lenders continue to fall from their peaks back in June-July. There was a 3.3 per cent fall in the value of loans for all dwellings in September and a 1.2 per cent fall in the number of loans for owner-occupiers. Not surprising, given the high levels of mortgage and personal indebtedness already wracked up by consumers in recent years.