Central Banks
Australia Signals Further Tightening After Unexpected Rate Hike
- Lowe says board reached ‘strong consensus’ on today’s increase
- RBA ‘deadly serious’ about bringing down inflation, Lowe says
Australia’s central bank signaled further policy tightening ahead after unexpectedly raising interest rates by a quarter-percentage point on Tuesday, sending the currency and bond yields surging.
The Reserve Bank increased its cash rate to 3.85%, the highest level since April 2012, in a decision predicted by only nine of 30 economists. Money markets rapidly revised up expectations for further moves and are now pricing in a rate of just under 4% by October, from around 3.6% before today’s decision.