Australian shares jumped after the RBA raised interest rates in line with expectations, with bank stocks responding positively to the news.
An advance by the Australian sharemarket accelerated on Tuesday afternoon after the Reserve Bank raised interest rates in line with expectations, briefly soothing investors’ fears that aggressive tightening might trigger a sharp economic slowdown.
“Had the RBA hiked by less than it did, it would’ve been accused of being too soft on inflation, but had it gone larger, the market would’ve interpreted it as too heavy-handed and risking a recession. So today’s rate rise was a bit of a goldilocks outcome for shares.” “Tight supply conditions are likely to outweigh the downside risks to demand from an economic slowdown, and leaves price risk skewed to the upside still through the second half of 2022,” said Baden Moore, head of commodities research at National Australia Bank.The rise in oil prices boosted the energy sector, which was the best performing pocket of the sharemarket on Tuesday.
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