The Reserve Bank raised the cash rate to 4.35 per cent and the question now for economists is whether it was the last increase of the cycle.
Reserve Bank governor Michele Bullock has hit borrowers with a 13th interest rate rise as she warned inflation will be higher next year than first thought and another rate rise was possible.
The question for economists is whether the rate rise was the final move in the most rapid tightening cycle in decades, or whether Ms Bullock will need to deliver further increases to ensure inflation, currently 5.4 per cent, returns to target by the bank’s preferred deadline of December 2025. “In making its decisions, the board will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market.”
Ms Bullock’s post-meeting statement omitted her previous assessment that recent data were consistent with getting inflation back to target over the next couple of years.Tuesday’s meeting took on political undertones after Treasurer Jim Chalmers said the surprising strength in the September quarter inflation figures did not amount to a material change in the outlook.Several economists said
Adding to the chorus of voices calling for higher rates was the International Monetary Fund, which last week offered the RBA unusually explicit monetary policy advice to raise the cash rate to tackle “high and persistent inflation”.
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