Australian dollar gets limited support from well-flagged rate hike
TLT•The Reserve Bank of Australia unanimously raised its cash rate by 25 basis points to 4.60%, as widely expected. Markets imply a 44% chance of another hike in November and 60% in December.
1. RBA raises rates
The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.60%, a 15-year high and its fourth increase this year. The board’s decision was unanimous, and it indicated it was ready to raise rates further if needed to curb stubborn inflation. The Australian dollar received only fleeting support, with markets having fully priced in the move.
2. Inflation and next steps
Markets imply a 44% chance of another hike in November and 60% in December. August consumer price data, due Wednesday, is forecast to show inflation accelerating to 4.1% from 3.5%, while core inflation is seen at 3.6%, above the RBA’s 2% to 3% target range. BlackRock Australia’s Katherine Palmer said the data would be an important gauge of domestic price pressures and a key input into the policy outlook.
