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Recent Reserve Bank of Australia (RBA) commentary on inflation and interest rates has been inconsistent, leading to wide swings in interest rate expectations.
When the RBA Board delivered its interest rate decision last month, its commentary was unambiguously hawkish. The Board unanimously lifted the cash rate by 25 bp to 4.60%, identified inflation as its top priority, and explicitly stated it would raise rates further if needed.
The subsequent Minutes reinforced that message, focusing on upside inflation risks, domestic capacity pressures and the possibility that a higher neutral rate means policy is less restrictive than it appears.
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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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