- Prior 1.35%
- Inflation is expected to peak later this year, then decline back towards 2-3% range
- Central forecast is for inflation to be around 7.75% over 2022, a little over 4% over 2023
- Australian economy is expected to continue to grow strongly this year
- Employment is growing strongly, consumer spending has been resilient
- A key source of uncertainty continues to be the behaviour of household spending
- Rate hike today is a further step in terms of policy normalisation
- Expects to take further steps over the months ahead, but it is not on a pre-set path
- Full statement
The aussie is falling on the decision as the RBA delivers as expected but makes a subtle change to their forward guidance. In that passage, the central bank changes up the wording on rate hikes by saying it is now taking further steps in terms of normalising policy and not withdrawing monetary support. However, the big change is that policymakers may not be on a "pre-set path" moving forward - a hint that perhaps the pace of rate hikes may slow down. That to me is what is putting a drag on the aussie with AUD/USD falling from 0.7015 to a low of 0.6985 after the event.
It's a subtle change but one that follows a similar playbook to the Fed last week.