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RBA to raise rates another half point in September, with slower pace of tightening ahead – Reuters poll

The Australia’s central bank will raise the cash rate by 50 basis points on Tuesday to curb rising inflationbut will moderate the rate of increases in the remainder of the year, according to a Reuters survey of economists.

The survey update also mentions that the Reserve Bank of Australia (RBA), one of the last to enter the global monetary policy tightening cycle, has raised rates by a total of 175 basis points since May, up to 1.85%.

Results of the test

Twenty-seven of 29 economists polled by Reuters between August 26 and September 1 forecast the RBA would raise the cash rate by 50 basis points at its meeting on September 6, taking rates to 2.35%, more than three times higher than before the COVID-19 pandemic.

The four major local banks – ANZ, Westpac, CBA and NAB – were among those expecting a 50 basis point hike on Tuesday. The remaining two expect a movement of 40 basis points.

The majority of respondents to an additional question predicted that the central bank would return to 25 basis point hikes at the October and November meetings.

Economists have advanced their rate hike expectations for the eighth consecutive time, and now just over half, or 15 of 29, expect the cash rate to reach 3.10% or more by the end of this year, online with market prices.

The remaining 14 respondents expect rates to end in 2022 at 3.00% or less. According to the median forecast, rates are expected to remain at 3.10% until the end of next year.

More than a third of those surveyed, 10 of 29, predicted rates would hit 3.35% or higher by the end of March.

Source: Fx Street

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