Financial markets have ramped up expectations the Reserve Bank will raise its cash rate at least three more times to above 4 per cent this year to combat inflation.
Financial markets have ramped up expectations the Reserve Bank will raise its cash rate at least three more times to above 4 per cent this year to combat inflation as some of the country’s biggest retailers warn that consumer spending has started to slow.flat sales growth since the start of the year and warned the economy was entering “an uncertain period” following nine successive interest rate rises.
In its statement on monetary policy released on Friday, the RBA said household spending was a “key source of uncertainty” for the economic outlook after having moderated over the second half of last year. Economists at JPMorgan told clients that commentary from the RBA had created “not just uncertainty about sequencing, but also a less certain destination,” noting it had previously “seemed the board was getting to a somewhat pre-determined level of the cash rate, while finessing the timing”.
“Private meetings between the RBA governor and deputy and external parties should be held – but we need a transparent diary entry and preferably a meeting transcript afterwards to ensure that the market is fully informed.” “A group of forecasters misread them,” he said. “We know they talked about a 50 basis point hike in December and what has changed is more inflation and strong activity in the data since December.”
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