Published July 5, 2022 9:50 am est
by Richard F. Cason, 
Editor in Chief,
NewsMovesmarketsForex
Key Take Aways-
- Reserve Bank of Australia Monetary Policy Committee Hikes rates by 50 bps to 1.35 percent on July 5, 2022, this makes Three straight consecutive rate hikes this year
- The RBA MPC lead by Governor Philp Lowe also increase the Interest rate on Exchange Settlement balances by 50 bps to 1.25 percent
- The main reason for the consecutive rate hike is based on high global and domestic inflation levels, driven and perpetuated by the war in Ukraine and China COVID-19 lock down supply chain disruptions
- RBA expects that inflation will peak last quarter of this year and then decline back toward, Target inflation rate of 2-3% range
The Reserve Bank of Australia Monetary Policy Committee led by Governor Philp Low, today announced that it would raise the cash target rate by 50 bps 1.35%.This makes three consecutive of rate hikes implement this year alone.
Be sure to catch and follow our previous RBA story Inflation Running Amok, Reserve Bank of Australia Raises Interest Rates to .85 Percent.
Inflation is Estimated to Peak Late This Year
According to the RBA MPC “inflation is forecast to peak later this year and then decline back towards the 2-3 percent range next year. As global supply-side problems continue to ease and commodity prices stabilse, even if a high level, inflation is expected to moderate.
Higher interest rates will also help establish a more sustainable balance between the demand for and the supply of goods and services.
Medium-term inflation expectations remain well anchored and it is important that this remains the case. A full set of updated forecast will be published next month following the release of the June quarter CPI.”
RBA MPC addresses Uncertainty in Household economic outlook
RBA monetary policy committee further clarifies their position on economic outlook by stating: ..“paying close attention to the global outlook, which remains clouded by the war in Ukraine and its effect on the pries for energy and agricultural commodities… One source of ongoing uncertainty about the economic outlook is the behaviour of household spending. The recent spending data have been positive, although household budgets ae under pressure from higher prices and higher interest rates. Housing prices have also declined in some markets over recent months after the large increases of recent years.
RBA Hints to Possible interest rate Hikes in Over the Months Ahead
The board also concludes the monetary meeting by hinting of future rate hikes by stating: ” The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead. The size and timing of future in interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and labor market. The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.”
Keep in mind that the RBA, (MPC) meets again next month in August of 2022.
For more Developing intriguing Central Bank Stories be sure to visit our Central Bank Breaking News Here:
Will The Reserve Bank Of Australia MPC Raise cash rates in July?
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