RBA Expected to Deliver Another 25 Basis Points Rate Hike in May After March Rate Hike, ANZ Research Says

MT Newswires Live03-17

The Reserve Bank of Australia (RBA) is expected to deliver an additional 25 basis points increase in May, which would take the cash rate to 4.35%, ANZ Research said in a note on Tuesday.

The central bank decided to increase the official cash rate by 25 basis points to 4.1%, as was generally expected. Five members of the monetary policy board voted for a rate increase versus four in favor of no change.

The labor market is viewed by the RBA as having tightened recently, while the focus on capacity pressures in the central bank's monetary policy statement is likely to have been heightened by the robust fourth quarter GDP result.

The RBA's initial thinking seems to be that the conflict in the Middle East will be more of an inflation shock than a demand shock. The conflict is seen as posing "substantial risks in both directions."

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