RBA surprises the market by raising the cash rate target rate, by 25bps to 4.10. Tightening bias is maintained as “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe”.
The central bank noted that while inflation is “still too high” even though it has “passed its peak.” Also, it will be “some time yet” before inflation falls back to target range. It explained, “this further increase in interest rates is to provide greater confidence that inflation will return to target within a reasonable timeframe”.
Growth “has slowed” and labor market conditions “remain very tight” even though eased. Wages growth “has picked up” but is “still consistent with the inflation target”. The path to soft landing “remains a narrow one” and a “significant source” of uncertainty continues to be household consumption.
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