RBA Resumes Rate Hikes, Lifts Hurdle to Further Tightening

Bloomberg2023-11-07

(Bloomberg) -- Australia’s central bank resumed raising interest rates on Tuesday in a widely anticipated move, while signaling a higher hurdle to further policy tightening that sent the currency ...

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Israel Latest: Netanyahu Sees a Role in Gaza Security After War. WeWork Goes Bankrupt, Signs Pact With Creditors to Cut Debt. Trump Shouts at Judge and Lawyers in Wild Day on Witness Stand. The Reserve Bank increased its cash rate to a 12-year high of 4.35% and revised up its inflation forecast to 3.5% by end-2024. It also lowered the predicted peak in unemployment to 4.25% from 4.5%, underscoring the resilience in the broader economy to the central bank’s tightening so far.While the RBA’s central forecast is for inflation to continue to ease, “progress looks to be slower than earlier expected,” Bullock said, adding that data in recent months “suggests that the risk of i","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"WBC.AU":"WESTPAC BANKING CORPORATION","NABHA.AU":"NAB Pref","BK7135":"综合性银行","RY":"加拿大皇家银行","GS":"高盛","WBCPE.AU":"Westpac Banking Corp Pref E","WBCPL.AU":"WESTPAC BANKING CORP","NAB.AU":"NATIONAL AUSTRALIA BANK LTD","WBCPK.AU":"Westpac Banking Corporation","NABPC.AU":"NAB Pref C","WBCPJ.AU":"WESTPAC BANKING CORP","WBCPI.AU":"WESTPAC BANKING","NABPI.AU":"National Australia Bank Ltd","NABPF.AU":"NAB Pref","NABPH.AU":"NATIONAL AUSTRALIA BANK","NABPE.AU":"NAB Pref","WBCPH.AU":"WESTPAC BANKING CORP - PUBLIC","NABPJ.AU":"National Australia Bank Ltd"},"translate_title":"澳大利亚央行恢复加息，为进一步收紧货币政策扫清障碍","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NABPJ.AU":0.9,"WBCPL.AU":0.9,"WBCPK.AU":0.9,"WBCPJ.AU":0.9,"WBCPI.AU":0.9,"WBCPH.AU":0.9,"WBCPE.AU":0.9,"WBC.AU":0.9,"RY":0.9,"NABPI.AU":0.9,"NABPH.AU":0.9,"NABPF.AU":0.9,"NABPE.AU":0.9,"NABPC.AU":0.9,"NABHA.AU":0.9,"NAB.AU":0.9,"GS":0.9},"content_text":"(Bloomberg) -- Australia’s central bank resumed raising interest rates on Tuesday in a widely anticipated move, while signaling a higher hurdle to further policy tightening that sent the currency lower.\nMost Read from Bloomberg\n\nTrump Testimony Called a ‘Broken Record’ by Judge: Trial Update\nIsrael Latest: Netanyahu Sees a Role in Gaza Security After War\nWeWork Goes Bankrupt, Signs Pact With Creditors to Cut Debt\nWall Street Faces ‘Reality Check’ After Big Rally: Markets Wrap\nTrump Shouts at Judge and Lawyers in Wild Day on Witness Stand\n\nThe Reserve Bank increased its cash rate to a 12-year high of 4.35% and revised up its inflation forecast to 3.5% by end-2024. It also lowered the predicted peak in unemployment to 4.25% from 4.5%, underscoring the resilience in the broader economy to the central bank’s tightening so far.\n“The board judged an increase in interest rates was warranted today to be more assured” of inflation returning to target, Governor Michele Bullock said in her statement. “Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks.” \nBullock’s tempering of the RBA’s tightening bias sent the Aussie dollar down 0.8% to 64.36 US cents at 3:49 pm in Sydney, and the policy-sensitive three-year government bond yields fell 2 basis points to 4.25%. \n“The shift in language from ‘some further tightening of monetary policy’ to ‘whether further tightening of monetary policy’ could be taken as dovish and may signal that the board feels this is a final ‘insurance’ hike in this cycle,” said Josh Gilbert, a senior analyst at eToro Ltd. “This makes incoming data points heading into year-end all that more critical.”\nAustralia’s benchmark stock index dropped as much as 0.7% in the aftermath of the rate hike, but quickly pared its losses to be down 0.2%. \nThe RBA is the only developed-world central bank to raise rates since September after third-quarter inflation came in stronger than expected, suggesting it had more work to do to restrain prices.\n“The RBA’s decision stands in contrast to the recent decisions of the FOMC, ECB and Bank of England to hold rates,” said Luci Ellis, chief economist at Westpac Banking Corp.\n“At a deeper level, though, all of these central banks are facing similar decisions,” said Ellis, a former RBA assistant governor. “Each central bank is watching the data unfold for signs that they need to do more.” \nInflation is now only expected to hit the top of the RBA’s 2-3% target by end-2025, from its previous forecast of 2.8%, forcing it to keep open the door to further tightening. By contrast, the Federal Reserve is seen cutting rates next year with the latest US data showing a rise in unemployment. \nWhile the RBA’s central forecast is for inflation to continue to ease, “progress looks to be slower than earlier expected,” Bullock said, adding that data in recent months “suggests that the risk of inflation remaining higher for longer has increased.”\nThe central bank will release its full suite of forecasts on Friday in its quarterly Statement on Monetary Policy.\nWhat Bloomberg Economics Says...\n“The hike will damp an already softening economy, and the data over the rest of 2023 and early 2024 will probably shift the discussion around policy toward how soon the RBA begins reversing course”\n“We think Australia’s rates cycle is now over, and the next move is down”\n— James McIntyre, economist.\nFor the full report, click here\nAustralia has tightened at a slower pace than global counterparts, having raised rates by 4.25 percentage points compared with 5.25 points in New Zealand and the US.\nThe RBA’s cautious approach reflects its desire to bring the economy in for a soft landing. Bullock and her colleagues are also mindful of the impact of tightening on Australia’s highly geared borrowers who are overwhelmingly on variable rates, unlike the US where most mortgages are fixed for 30 years. \nData on the economy has been mixed lately. The housing market has rebounded to near record highs, retail sales rose by more than anticipated and business confidence is still proving resilient. Also helping the economy is surging population growth that’s boosting demand for everything from housing to transport and dining out.\nOn the flip side, consumer sentiment is in the doldrums while the country’s tight labor market is beginning to show signs of loosening, with economists predicting the jobless rate will soon rise from the current ultra-low 3.6%. \nBullock has acknowledged the path to cooling inflation while preserving employment gains is a “narrow” one. Her determination to stay on that path is one reason why economists expect Australia will avoid a recession.\n--With assistance from Garfield Reynolds and Georgina McKay.\n(Adds comment from analyst, economists, updates market reaction.)\nMost Read from Bloomberg Businessweek\n\nTop-Ranked MBA Programs Struggle to Reverse Declining Applications\nWho’s Ready for a Trump-Biden Rematch? Anyone? Hello?\nThe US Housing Market Has Become an Impossible Mess\nOnline Gambling Has Millions of Young Africans Battling Addiction\nThese Five Countries Are Key Economic ‘Connectors’ in a Fragmenting World\n\n©2023 Bloomberg L.P.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2381539944"}