RBA Hikes Interest Rates
London: 7 November 2023 (TraderMade): The Reserve Bank of Australia raises the cash rate amid an inflation surge. In a highly anticipated move, the Reserve Bank of Australia (RBA) announced a 25-basis-point increase in its cash rate, pushing it to 4.35% on 7 November.
This decision followed four consecutive meetings holding the rate at 4.1%, aligning with market expectations. The adjustment marks the 13th rate hike since May 2022 and comes as a response to inflation proving more persistent than previously anticipated due to a continued rise in service prices.
The move on Tuesday brought borrowing costs to their highest point since January 2011, signifying the RBA's commitment to addressing the inflation challenge. The latest projections indicate that Consumer Price Index (CPI) inflation is estimated to hover around 3.5% by the end of 2024, at the upper limit of the 2 to 3% target range by the end of 2025.
Newly appointed RBA Governor Michelle Bullock stated that the decision to further tighten monetary policy will depend on ongoing data and evolving risk assessments, with a primary objective of returning inflation to the target range within a reasonable timeframe.
The RBA board reiterated its commitment to closely monitor the global economy, domestic demand trends, and the outlook for inflation and the labor market.
In a parallel move, the interest rate on Exchange Settlement balances was also raised to 4.25%. This raise emphasizes the central bank's resolve to address the challenges posed by the current economic landscape.
