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
  • 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.

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This article was written by Eamonn Sheridan at Source