Reported 8 months ago
The Reserve Bank of Australia (RBA) announced its monetary policy statement, keeping the benchmark interest rate frozen at a 12-year high for the fifth consecutive time. Despite this, the RBA warned of risks from ongoing high inflation, hinting at a possible rate hike. Market expectations of a rate cut by the end of the year sharply declined, leading to a rise in the Australian dollar post-decision. The RBA remains cautious about the inflation outlook, with upcoming data potentially influencing further monetary policy tightening in the August meeting. However, the recent economic data sounding the inflation alarm does not mean there is sufficient reason for a rate hike, with markets now seeing a diminished probability of a rate cut before 2021. Renowned economist Shane Oliver suggested the recent risks could lead to a rate hike, especially if second-quarter inflation data unexpectedly rises. This uptrend in inflation, hitting a five-month high in April, has contradicted calls for a rate cut in November by banks like the Commonwealth Bank of Australia and National Australia Bank.
Source: YAHOO