Australia’s central bank raises rates and says it’s not following a preset policy

Australia’s central bank raises rates and says it’s not following a preset policy

Australia’s central bank raised interest rates for the fourth consecutive month on Tuesday, but tempered expectations of further hikes as it anticipated faster inflation but also a slowing economy.

At the end of its August monetary policy meeting, the Reserve Bank of Australia (RBA) raised its interest rate by 50 basis points to 1.85%, an increase of 175 basis points since May. the most drastic since the early 1990s.

However, RBA Governor Philip Lowe also assured that the outlook for monetary policy was not tied to a set plan.

“The Board expects to take further steps in the process of normalizing monetary conditions in the coming months, but it is not on a predetermined path,” Lowe said.

Markets viewed this as an easing move as Lowe had repeatedly stated that the RBA Council wanted to bring rates to a neutral level of at least 2.5%, where it would theoretically neither stimulate nor delay economic growth.

Investors reacted by sending the local dollar down 0.6% to $0.6977, while three-year bond futures rose 10 ticks to $97.270 as the market trimmed bets on how far they would go. types ultimately.

Swap markets moved to now project a high of around 3.30%, down from 3.41% prior to the RBA statement.

Lowe also outlined the RBA’s new economic forecasts, saying consumer price inflation is now expected to peak at 7.75%, up from 7% previously and 6.1% in the June quarter.

Economic growth stands at 3.25% in 2022 and 1.75% in subsequent years. Previously, the bank had forecast growth of 4.2% in 2022 and 2.0% in 2023.

Melissa Galbraith
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.