According to US-based Fitch Ratings, the Reserve Bank of Australia’s (RBA) monetary policy tightening in November it keeps the expectations of a rate hike intact in 2023 amid the imminent risk of inflation.
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“The RBA has indicated that it will not raise the cash rate until inflation is sustainable within its 2% -3% target range, a condition that was previously not expected to be met before 2024 under its baseline scenario. However , its orientation was softened in its monetary policy statement of November 2, 2021, which hinted that faster-than-expected progress towards meeting the inflation target could lead to an argument for raising the rate before 2024. The RBA also officially suspended its 0.1% target for the Australian government’s April 2024 bond yield. “
“We believe that the next step will be the completion of government bond purchases, probably late in the first quarter of 2022 or during the second quarter of that year; Bond purchases fell to A $ 4 billion a week from A $ 5 billion in September 2021. We continue to expect the cash rate to rise in 2023, although there is a possibility that it could even increase by the end of 2022 if inflation and wage growth exceed our assumptions.“.
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