Good piece here from Shane Oliver summing up the RBA’s situation.
The RBA has increased its cash rate again but slowed the pace to +0.25% which took the cash rate to 2.6%. This was in line with our view and a slowing “at some point” had been flagged by the RBA. In justifying another hike, the RBA noted inflation is still too high and expected to rise further due to global factors and strong demand and that it’s important that medium term inflation expectations remain “well anchored”. But the 250 basis points in rate hikes over six months is still the fastest series of hikes since 1994, so it made sense to slow the pace down “as it assesses the outlook for inflation and growth”.
Of course the slowdown in rate hikes to a “business as usual” 0.25% move does not mean the RBA has finished hiking as it repeated that it will do “what is necessary” to get inflation to target and it still expects to raise rates further. Banks are likely to pass the hike on in full to variable rate customers which will take mortgage rates to their highest in ten years.
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