20 December 2022 | Other

Bank of Australia could leave interest rates unchanged at its latest meeting

The Reserve Bank of Australia (RBA) was considering pausing its policy tightening cycle this month. But according to the meeting protocol, recent economic data suggests keeping the previous position for a while.

Two weeks ago, the RBA was considering three scenarios - 0.25%, 0.5%, or no rate hike. As a result of the negotiations, the rate increase was 0.25% to the 3.1% level.

The discussion and arguments for a pause occurred for the first time in the current RBA tightening cycle. Most economists expect an interest rate hike in 2023. They believe that there will be two more increases by 0.25%, after which the value will reach 3.6%.

Gareth Aird from Commonwealth Bank of Australia said that the occurrence of discussions about the pause signals that the RBA is actually considering the possibility of doing it.

Aird thinks that there will be a lot of problems next year. In his opinion, the RBA admits this and actually wants to stop raising rates.

The RBA has decided to continue tightening and noted that predictions indicate inflation may not return to the 2-3% target until several years from now, even with further rate rises.

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