Business

Australian interest rate decision in May 2022


Australia’s consumer price index rose 2.1% in the third quarter of 2022, with prices for food, petrol and other consumer goods all surging.

Ian Waldie | Bloomberg | beautiful pictures

Australia raised interest rates for the first time in more than a decade, a move widely expected as consumer prices rose.

Its central bank said on Tuesday that the cash rate would be raised 25 basis points to 0.35% – the first rate hike since November 2010.

Philip Lowe, governor of the Reserve Bank of Australia, said it was the right time to start pulling out some of the “extraordinary monetary support” that has been put in place to help the Australian economy during the pandemic.

“The economy has proven resilient and inflation has risen faster and higher than expected,” Lowe said in a statement. “There is also evidence that wage growth is picking up. With this, and very low interest rates, it is very appropriate to start the process of normalizing monetary conditions.”

According to the median forecast of a Reuters poll of 32 economists.

Shane Oliver, head of investment strategy and chief economist at Australian financial services firm AMP, said the scale of the rate hike was above market expectations. “The RBA seems to have partially accepted the argument that it must do something decisive to [to] signaled its determination to reduce inflation again. “

Select stocks and investment trends from CNBC Pro:

Analysts had widely expected the central bank to raise interest rates, given the rapid rise in inflation. Prices of food, gasoline and other consumer goods all rose last quarter.

Australia’s consumer price index rose 2.1 per cent in the first quarter, beating expectations for a 1.7 per cent gain, data showed last week. On an annualized basis, consumer inflation spiked 5.1% – the highest since 2001 and above expectations for a 4.6% increase.

Lowe acknowledged in his statement that inflation was higher than expected, although it remained lower than in most other advanced economies.

He said: “This increase in inflation largely reflects global factors. However, domestic capacity constraints are playing an increasingly important role and inflationary pressures are increasing, in which companies are more prepared to ride out cost increases to consumer prices,” he said.

Prices are expected to rise further in the near-term, but once supply disruptions are resolved, Lowe said inflation is expected to fall back within the country’s target range of 2%. to 3%.

Mr Lowe said the outlook for Australia’s gross domestic product “remains positive” and is forecast to grow 4.25% in 2022 and 2% next year. However, he noted that there are uncertainties that could affect the global economy, such as the Russia-Ukraine war and the disruption of Covid in China.

AMP’s Oliver said he expects the cash ratio to rise to 1.5% by year-end and to 2% by the middle of next year.

“Rising interest rates are unlikely to stall the economic recovery as monetary policy remains very easy, but they will slow home price growth, where we see a 10 to 15 per cent drop in home prices,” he said. early 2024,” he said. after the announcement.

“Banks are likely to pass on the entire RBA rate hike to their variable rate clients and deposit rates will also start to rise,” added Oliver.



Source link

news7g

News7g: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button