Interest Rate Forecast Australia

The Reserve Bank of Australia announced a 50-basis point increase in the cash rate to 1.85 percent during its August 2022 meeting.

The central bank’s decision to hike the cash rate by another 25 bps to 2.25% followed two previous rate hikes (in June and July) of 50 bps each, bringing the cash rate to its highest level in almost two years.

The RBA stated that rate hikes over the past few months had been necessary to bring inflation down and to create a more sustainable demand and supply, adding that it would commit to further tightening if the data warranted it. As the size and timing of future rate hikes would be guided by incoming data, the RBA was not on a pre-set path.

The central bank noted that the 2022 consumer price index was projected to be 7.75% and 4% in 2023. The bank reaffirmed its commitment to doing what is necessary to ensure inflation returns to target while paying attention to the global outlook, which stays clouded by war in Ukraine, its effect on energy and commodity prices, and China’s anti-corruption measures.

The board of directors of the Federal Reserve increased the interest rate on exchange settlement balances by 50 basis points to 1.75 percent.