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While global central banks take on jumbo hikes, Australia took a smaller step

Australia’s central bank surprised markets in early October with a smaller-than-expected rate hike, a move the Reserve Bank of Australia acknowledged was a “finely balanced” debate even as it vowed to keep inflation in check.

While global central banks take on jumbo hikes, Australia took a smaller step
While global central banks take on jumbo hikes, Australia took a smaller step

According to RBA minutes from the Oct. 4 meeting that were released Tuesday, two options were considered before the bank eventually raised its cash rate by 25 basis points to 2.6%, a nine-year high.

It marked the bank’s sixth consecutive hike in its tightening cycle to tame global inflation rates.

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Prospects of continued “jumbo” interest rate hikes persist as central banks around the world attempt to tackle global inflation. The U.S. Federal Reserved raised interest rates by 75 basis points in its September meeting, after the same move by the European Central bank that same month.

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The RBA considered two options: Continuing with the 50 basis point increases in the cash rate, or announcing a smaller 25 basis point hike, the minutes said.

“The arguments for continuing with an increase of 50 basis points stemmed from the inflationary environment and risks to inflation expectations,” according to the minutes.

In the end, the central bank’s board members said they “recognized the benefits of a smaller increase.”

Source: https://www.cnbc.com/2022/10/18/while-global-central-banks-take-on-jumbo-hikes-australia-took-a-smaller-step.html

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