Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
🙌 It's Here: the Only Stock Screener You'll Ever Need Get Started
RBA Hikes Interest Rates by 25 Bps, Cuts Growth Outlook
Published Oct 31, 2022 11:48PM ET
© Reuters.
By Ambar Warrick
Investing.com-- The Reserve Bank of Australia (RBA) raised interest rates as expected on Tuesday, but also hiked its inflation forecast and trimmed its GDP outlook as it flagged more headwinds for the economy from increased price pressures and rising rates.
The RBA raised its target cash rate by 25 basis points (bps) to 2.85%, bringing interest rates to their highest level in nine years. The central bank vowed to keep raising interest rates as needed, and that it will continue to adopt a data-driven approach.
The RBA raised its inflation forecast for the year to 8% from 7.75%. It also now expects Australia’s 2022 GDP to grow 3%, down from a previous forecast of 3.25%.
The Australian dollar reacted negatively to the move, sharply paring its intraday gains to trade about 0.3% higher at 0.6417. The bank’s negative forecast, coupled with a relatively smaller hike by the RBA, added to concerns over steadily rising inflation in the country. Tuesday's meeting marks the second consecutive 25 bps hike by the RBA, after a series of sharp hikes earlier this year.
Recent data showed that Australian inflation grew by a more than expected 7.3% to a 32-year high in the third quarter.
The RBA continued to signal that it was trying to maintain a balance between combating and preventing a shock to the economy from rising interest rates. Australian consumer and business sentiment has fallen sharply this year due to high inflation and rates.
“The (Monetary Policy) Board’s priority is to return inflation to the 2–3% range over time. It is seeking to do this while keeping the economy on an even keel. The path to achieving this balance remains a narrow one and it is clouded in uncertainty,” RBA Governor Philip Lowe said in a prepared statement.
Still, consumer spending - a key driver of the Australian economy - has so far remained robust, giving the RBA some economic headroom to keep raising rates. Australia’s job market is also strong, with unemployment at its lowest level in 48 years.
But the RBA also has to keep up pace with U.S. rate rises in order to defend the Australian dollar. A Federal Reserve interest rate decision due later this week is expected to shed more light on that front.
Related Articles
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.