Reuters reports that The Reserve Bank of Australia (RBA) decided to raise rates at its May meeting due to inflationary risks stemming from weak productivity growth, persistently high utility inflation and faster-than-expected rent growthstating that further rate hikes may be necessary.
The minutes of the RBA’s May 2 policy meeting, released on Tuesday, indicated that Board members also considered a pause, but that inflation risks warranted a 25 basis point increase, after holding rates steady in Aprilreports Reuters.
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“In weighing the two options, members recognized that the arguments were finely balancedbut they deemed it appropriate to raise interest rates at their meeting.”
“Members also agreed that further interest rate hikes may still be necessarybut that this would depend on how the economy and inflation evolve”.
“The main driver of the RBA’s decision was its inflation outlook. Inflation is not expected to fall to the top of the Bank’s target range of 2-3% until mid-2025leaving little room for upside risk.”
“Members noted strong employment data and high service price inflation in Marchwhile the depreciation of the Australian dollar and the rise in house prices may have been partly caused by the decision to pause rates in April”.
Governor Philip Lowe has warned that the central bank cannot take too long to rein in inflation. Rates have already risen a whopping 375 basis points since last May, to an 11-year high of 3.85%.”
About the RBA minutes
The Reserve Bank of Australia (RBA) publishes the Minutes of its monetary policy meeting two weeks after the interest rate decision is announced. Provides a detailed record of discussions held among RBA board members about monetary policy and economic conditions that influenced their decision to adjust interest rates and/or purchase bonds, which had an impact significant in the AUD. The minutes also reveal considerations on international economic developments and the value of the exchange rate.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
