The RBA likely believes it won’t need to hike rates again – but the worst thing it could do is say that out loud
When it comes to the Reserve Bank, there’s a whiff of a parent making a threat they have no intention of carrying out Get our breaking news email , free app or daily news podcast Every parent makes threats in an effort to get their kids to behave – and every parent hopes they won’t have to follow through. Some (most?) parents even make threats they have zero intention of carrying out. Continue…
The Reserve Bank of Australia (RBA) appears confident it will not have to raise interest rates again, according to recent statements and forecasts. The central bank held its key policy rate at 4.35% during a unanimous decision made by the RBA board on Tuesday, following a series of three rate hikes earlier in the year. While the board acknowledges inflation remains too high, they believe it may stabilise around the RBA's 2.5% target within a year.
However, RBA Governor Michele Bullock's recent press conference showed a more cautious tone, hinting at the possibility of further rate hikes if needed. Despite the central bank's reassurances, financial markets have adjusted their expectations, with the likelihood of another rate increase by the end of the year rising from 53% to 67%.
The RBA's communication strategy appears to be emphasising their readiness to act if necessary, but the risk is that openly stating such a possibility could backfire, undermining market confidence in their commitment to rate hikes when required.
Written by urgent.news from The Guardian's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
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