Australia - RBA raises the cash rate by +25bp to 3.35%, as expected

Reserve Bank of Australia February 2023 monetary policy decision.

The ninth in a row of cash rate hikes, cash rate to a 10-year high. The RBA says it expects further increases in the cash rate are yet to come.

Headlines via Reuters:

• Inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term is expected to decline this year due to both global factors and slower growth in domestic demand.
• Board expects further increases in interest rates
• Board resolute in its determination to return inflation to target
• The central forecast is for CPI inflation to decline to 4¾ per cent this year and to around 3 per cent by mid-2025.
• GDP growth expected to slow to around 1½ per cent over 2023 and 2024.
• Path to achieving a soft landing Soft landing A "soft landing" in the economy refers to a situation where economic growth slows down, but does not fall into a recession. This is often the desired outcome for policymakers, as it allows them to make adjustments to the economy without causing widespread job losses or other negative effects associated with recessions.An example of a soft landing in the economy occurred in the United States between the years of 2004 and 2006. During this time, the Federal Reserve raised interest rates to cool do A "soft landing" in the economy refers to a situation where economic growth slows down, but does not fall into a recession. This is often the desired outcome for policymakers, as it allows them to make adjustments to the economy without causing widespread job losses or other negative effects associated with recessions.An example of a soft landing in the economy occurred in the United States between the years of 2004 and 2006. During this time, the Federal Reserve raised interest rates to cool do Read this Term remains a narrow one
• The labour market remains very tight.
• Central forecast is for the unemployment rate to increase to 3¾ per cent by the end of this year and 4½ per cent by mid-2025.
• Wages growth is continuing to pick up from the low rates of recent years and a further pick-up is expected due to the tight labour market and higher inflation
• Some households have substantial savings buffers, but others are experiencing a painful squeeze on budgets
• Household balance sheets are also being affected by the decline in housing prices
• Uncertainties mean that there are a range of potential scenarios for the Australian economy

Full text is here:

Statement by Philip Lowe, Governor: Monetary Policy Decision

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Background to this:

• RBA preview: "much higher-than-expected inflation means (rate hike) is firmly in the bag"

(more previews of this decision at that post if you are after them)