Australia – RBA announce a +25bp interest rate hike, as widely expected

Reserve Bank of Australia with their 13th cash rate hike since they began this hiking cycle in May of 2022.

Headlines via Reuters:

• Board remains resolute in its determination to return inflation to
  target
• CPI inflation is now
  expected to be around 3½ per cent by the end of 2024 and
  at the top of the target range of 2 to 3 per cent by
  the end of 2025.
• Board judged an
  increase in interest rates was warranted today to be more assured
  that inflation would return to target in a reasonable timeframe.
• Whether further
  tightening of monetary policy is required to ensure that inflation
  returns to target in a reasonable time frame will depend upon the
  data and the evolving assessment of risks
• Still significant
  uncertainties around the outlook
• Services price
  inflation has been surprisingly persistent overseas and the same
  could occur in Australia
• To date, medium-term
  inflation expectations have been consistent with the inflation target
  and it is important that this remains the case
• High inflation is
  weighing on people’s real incomes and household consumption growth
  is weak, as is dwelling investment
• Wages growth has
  picked up over the past year but is still consistent with the
  inflation target, provided that productivity growth picks up
• Weight of
  information suggests that the risk of inflation remaining higher for
  longer has increased.

Bolding above is mine. The RBA doesn’t know if this is the peak for rates and have allowed the option of more if needed.

Given how widely expected this cash rate rise was its no surprise to see AUD/USD a little lower after the announcement.

Full text:

• Statement by Michele Bullock, Governor: Monetary Policy Decision

Still ahead in 10 minutes time:

• Australian Treasurer Chalmers to speak on the RBA interest rate decision right after

—

Background:

• Reserve Bank of Australia decision due imminently, preview

• Reserve Bank of Australia expected to hike its cash rate by 25bp today, but “a close call”

• Former RBA Board member on ways to lower Australian inflation (& why RBA will hike today)

• RBA Shadow Board recommends a rate hike at tomorrow’s monetary policy meeting

• Failure to act on high CPI threatens to damage the Reserve Bank of Australia’s credibility
• Reuters Poll: RBA to high cash rate to 4.35% on November 7
• IMF tells the RBA to hike interest rates higher, and hold ’em high for longer
• Westpac forecasting a November Reserve Bank of Australia rate hike

• UBS forecasts a November RBA interest rate hike, and likely more to come after that
• RBA rate hike incoming on November 7 – will they hike again in December?
• Commonwealth Bank of Australia forecast a 25bp RBA rate hike on November 7
• Australia – Demand for luxury supercars “through the roof”
• Australian Treasurer Chalmers says inflation is moderating but persistent
• ANZ forecasts a 25bp RBA interest rate hike on November 7 (previous forecast was December)
• Australia – market is rapidly pricing in a November rate hike after surging inflation data
• AUD/USD jumped higher on Australian inflation data, November 7 rate hike is likely now.

This article was written by Eamonn Sheridan at www.forexlive.com. Source