RBA raises cash rate target by 50bps to 2.35% as widely expected. The Board “expects to increase interest rates further over the months ahead”, but it’s “not on a pre-set path”. The size and timing of future hikes will be “guided by the income data and the Board’s assessment of the outlook for inflation and the labour market.”
Regarding inflation, RBA expects it to peak “later this year”. The central forecasts is for CPI to be around 7.75% over 2022, a little above 4% over 2023, and then around 3% over 2024.
The economy is “continuing to grow solidly” as boosted by a “record level of the terms of trade”. Labor market is “very tight” while wages growth “has picked up”.
It maintained that an important source of uncertainty is household spending, which is facing pressure from higher inflation and higher interest rates.
