Australia nears the point where rate hikes are over

A Reserve Bank of Australia (RBA) official confirmed this Thursday that the bank may soon stop raising interest rates. However, it was said the bank needs to see more evidence that demand has slowed.

Speaking to parliament, Michele Bullock, deputy governor of the bank, pointed out that the main driver of interest rates is the flow of economic data. According to her, it didn’t take much time for rates to rise significantly, and they are unlikely to stop. 

On the one hand, she suggests that the stop of the hikes could happen soon. Perhaps this will be done in order to observe the economy in such a state. On the other hand, Bullock says that at the moment there is no way to refuse to raise rates, but in this case a hike will be minimal. The exact timing and magnitude of the increase hasn’t been announced yet.

So far, the interest rate has reached 2.85%, the highest in nine years. In total, Australia's interest rate has been raised by 275 basis points since May.

According to some reports, the next rate hike is expected in December, and its value will be equal to 25 basis points. However, it’s impossible to rule out that the rate will remain the same. This could happen with a 20% probability.