RBA announces +25bp increase in cash rate to 3.6%. As expected.
Reserve Bank of Australia monetary policy decision and related statement by Governor Lowe.
Previous forecasts indicated that several hikes await:
- “The board expects that further interest rate hikes will be necessary in the coming months”
This guidance is soft today, at least somewhat on the upside, and then evaluates the data going forward. And this high inflation is temporary.
Lowe’s statement downplayed the warmongering. His conclusion (in bold):
- Council awaits further tightening of monetary policy will be necessary to ensure that inflation returns to target levels and that this period of high inflation is only temporary. In assessing when and by how much interest rates should rise, the Board pays particular attention to events the world economy, the evolution of household expenditure and the outlook for inflation and the labor market. The Board remains steadfast in its determination to return inflation to the target level and will do whatever is necessary to achieve this.
Brief headlines via Reuters:
- The Board remains steadfast in its determination to return inflation to the target
- The Board expects further tightening of monetary policy
- The monthly CPI indicator shows that inflation has peaked in Australia.
- Service price inflation remains high, and demand for some services is high in the summer
- The board is trying to bring inflation back to the 2-3% target range while keeping the economy in balance, but the path to a soft landing remains narrow.
- Australia’s economic growth has slowed
- The timing and extent of the slowdown in household spending is uncertain
- Household consumption growth slowed down due to worsening financial situation
- The uncertainty means there are a number of possible scenarios for the Australian economy
- Although conditions have eased somewhat, the labor market is very tight
- Wage growth continues to rise in response to a tight labor market and rising inflation
- The latest data points to the downside risk of a continued cycle in prices and wages
- However, the Council remains wary of the risk of a price-wage spiral, given the economy’s low reserve capacity and historically low unemployment.
And Reserve Bank of Australia Governor Lowe will speak tomorrow:
The Australian dollar (AUD) is the official currency of Australia, which is used in Christmas Island, Cocos (Keeling) Islands, Norfolk Island, as well as in the Pacific Independent States. Introduced in 1966, the AUD is currently the fifth most traded currency. in the world, behind only the US dollar, the euro, the Japanese yen and the British pound. Currency is very important to foreign exchange markets and is used as a regular trade against other large companies. The Reserve Bank of Australia (RBA) is the central bank
The Australian dollar (AUD) is the official currency of Australia and is used in Christmas Island, the Cocos (Keeling) Islands, Norfolk Island, and the Independent States of the Pacific Ocean. Introduced in 1966, the AUD is currently the fifth most traded currency. in the world, behind only the US dollar, the euro, the Japanese yen and the British pound. Currency is very important to foreign exchange markets and is used as a regular trade against other large companies. The Reserve Bank of Australia (RBA) is the central bank
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