RBA Assistant Governor Christopher Kent said in a speech, “The Board expects to increase interest rates further in the period ahead, given the need to establish a more sustainable balance of demand and supply and in the face of a very tight labour market.” The “size and timing” of rate increases will depend on “incoming data” and “outlook for inflation and the labour market.”
Kent also said the appreciation of the US dollar will “add to the cost of imports for a time” because much the global trade is invoices in it. At the same time, rise in US interest rates will also “contribute to a decline in global inflation pressures”. The depreciation of Australia’s nominal trade-weighted exchange rate over the year to date will contribute only a “very modest uplift in the level of consumer prices over the period ahead”.
