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RBA Signals That Rate Hike Pause May Not Be End of Tightening Cycle


By James Glynn

SYDNEY–The Reserve Bank of Australia has said that despite announcing a pause in interest-rate increases this month, it doesn’t want to send a message that the tightening cycle is over.

“Members observed that it was important to be clear that monetary policy may need to be tightened at subsequent meetings and that the purpose of pausing at this meeting was to allow time to gather more information,” the central bank said in the minutes of its April 4 policy meeting released Tuesday.

The RBA left its official cash rate on hold at 3.60% this month, snapping a record run of 10 consecutive increases that added an unprecedented 350 basis points to the rate since May last year.

Any coming decisions about interest rates will depend on trends in household spending, the outlook for inflation and the labor market, and developments in the global economy, the minutes said.

The RBA will get first-quarter inflation data next week, which are expected to show that while price pressures remain high, they likely peaked in the final months of last year. Recent monthly inflation reports have hinted at a peak in inflation in late 2022.

While the RBA’s board debated a further increase in interest rates, it determined that pausing to assess the impact of hikes so far was the better move.

“Members agreed that it would be helpful to have additional data and an updated set of forecasts before again considering when and how much more monetary policy would need to be tightened to bring inflation back to target within a reasonable timeframe,” it said.

Write to James Glynn at [email protected]



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