August 2, 2022
The Reserve Bank of Australia‘s Officials Cash Rate was raised to 1.85% from 1.35%. This was the third straight monthly hike of half a percentage point. An initial 15-basis point move from the record low of 0.10% was done in May. A released statement predicts a further rise in Australian CPI inflation to 7.75% this year, then a slow retreat to a little more than 4% in 2023 and 3%, the target ceiling, not until 2024. In the early days of the pandemic, CPI inflation had dipped as low as minus 0.3% in the second quarter of 2020 but has risen from 1.1% in 1Q 2021 to 6.1% last quarter, which was its highest level in 21 years. In his subsequent press conference, Governor Lowe implied that more rate hikes will occur but underscored that doing so is not yet a sealed deal and will instead depend on the evolution of inflation. One piece of good news is that medium-term inflation expectations so far remain well anchored, and monetary restraint has helped to constrain demand. Projected economic growth this year was revised downward by a percentage point to 2.35%.
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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