The Reserve Bank of Australia raised its cash rate by 25bps to 4.35% in November after maintaining it at 4.1% in the prior four meetings, in line with market expectations. Tuesday’s move brought borrowing costs to their highest level since January 2011, marking the 13th rate rise since May 2022, as inflation proved more persistent than expected a few months ago due to a further rise in prices of services. CPI inflation is now projected to be around 3-1/2% by the end of 2024 and at the top of the target range of 2 to 3% by the end of 2025.
New governor Michelle Bullock said in a statement that whether further tightening is needed to bring inflation returns to the target in a reasonable timeframe will depend upon the data and the evolving assessment of risks. The board reiterated that it will closely monitor the global economy, trends in domestic demand, and the outlook for inflation and the labour market. The board also hiked the interest rate on Exchange Settlement balances at 4.25%. source: Reserve Bank of Australia
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