The Reserve Bank of Australia kept its interest rate at 4.35%
The Reserve Bank of Australia (RBA) unanimously kept the interest rate at 4.35% on Tuesday. This decision was in line with market expectations, according to The Guardian World.
RBA Governor Michelle Bullock stated after the meeting that inflation remains too high and that the bank’s board is concerned about the risks of it accelerating. She noted that the central bank has already raised rates three times this year and is prepared to do so again if necessary.
The previous rate hike took place in May. The RBA’s latest forecasts predict that inflation will return to the target level of around 2.5% in about a year. The bank also noted that following three consecutive rate hikes at the start of the year, the economy appears to be slowing in line with expectations.
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The Guardian noted that the impact of events in the Middle East and high fuel prices has not been as immediate as feared. At the same time, the effects of the global oil shock could fully impact the economy within one to two years.
Following Bullock’s remarks, the market’s assessment of the probability of another rate hike by the end of the year rose from 53% to 67%. The author of the analysis suggests that the RBA’s hawkish rhetoric is intended to convince markets of the regulator’s readiness to tighten monetary policy if necessary.
