RBA Surprises the Markets with a 25-Basis Point Hike

It was a quiet morning for Asian markets. The lack of economic indicators left central banks in focus, with investors attempting to second-guess monetary policy moves by the RBA, the Fed, and the ECB.

This morning, the RBA surprised the markets with a 25-basis point interest rate hike to 3.85%.

According to the RBA Rate Statement,

• While inflation has passed its peak, an annual rate of 7% remains too high.
• Despite softer inflation numbers for Q1, the Board deemed a further increase in interest rates necessary to bring inflation to target within a reasonable timeframe.
• Central forecasts have inflation at 4.5% in 2023 and 3% in mid-2025.
• While goods price inflation is slowing, services price inflation is still very high, with upside risks in play.
• Unit labor costs are also rising…
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