RBA raises cash rate target by 25bps to 2.85% as widely expected. It maintains tightening bias and expects to “increase interest rates further over the period ahead”. The size and timing of future rate hikes will be determined by incoming data and the outlook for inflation and labor market.
The central bank expects inflation to “further increase” over the months ahead and peak at around 8% this year. CPI inflation is forecast to be around 4.75% over 2023 and a little above 3% over 2024. GDP growth forecast was “revised down a little” to 3% this year, 1.50% in 2023 and 2024. Unemployment rate is forecast to rise gradually from current 3.5% to a little above 4% in 2024 as economic growth slow.