Hike rates

Australia’s c.bank says to raise rates more and can keep pace with global peers

SYDNEY, Oct 18 (Reuters) – The Reserve Bank of Australia expects to raise interest rates further in the coming months, the deputy governor said on Tuesday, noting that the bank can achieve policy tightening. rate similar to that of its global counterparts thanks to smaller increases.

Speaking at the AFIA 2022 conference in Sydney, Michele Bullock said the 25 basis point move in October was due to national economic circumstances and the central bank’s board meeting more frequently than most of its counterparts 11 times a year.

“This is a particular benefit in these uncertain times, as it allows for more frequent assessment of evidence and recalibration if necessary,” Bullock said.

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“It also means that if we raise interest rates at every meeting, we can potentially act much faster than foreign central banks.”

The RBA has already hiked its key rate by 250 basis points to 2.6% since May and surprised markets earlier this month with a lower than expected 25 basis point hike after four outsized 50 point moves basic.

“The Board expects to raise interest rates further over the coming months. But the pace and timing will be determined by economic data,” Bullock said.

She said the Council was concerned about how household spending will react to successive price hikes and inflation, as the international economic environment has also deteriorated sharply.

Inflation hit a 21-year high of 6.1% in the June quarter and is thought to have accelerated to 6.9% in the September quarter.

Soaring inflation and expectations of further aggressive policy action from the US Federal Reserve and other central banks have led markets to bet that rates in Australia will have to rise to around 4%, while many analysts predict a peak between 2.85% and 3.6%.

“Our policy rate path has been as steep, if not steeper, than that of other central banks,” Bullock said.

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Reporting by Stella Qiu; Editing by Kim Coghill & Shri Navaratnam

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