OPINION: That the Reserve Bank has kept rates on hold while anticipating inflation will be higher for longer says it’s probably done raising rates.
He said earlier this week that if the RBA wouldn’t lift rates in August when it is “still not achieving their mandated goals, and are not expected to in the near-term” – that is,
To Tharenou’s point, the RBA has key rates on hold despite pushing out its forecast for when inflation gets back into the central bank’s 2 per cent to 3 per cent target range. Previously, the bank expected that would occur in June 2025, but now it sees a return to target by late 2025. To be clear, Bassanese’s base case remains that the RBA will need to increase rates once more – he expects a November rise will finish this tightening cycle – as consumer spending remains resilient in the months ahead.
The US CPI print, which landed on July 13, has helped consolidate the risk-on attitude on global markets. The SP 500 is up 20 per cent since the start of the year and 3 per cent in the last month, while the local ASX 200 is up 7.2 per cent year-to-date, and 2.8 per cent in the last month.Tuesday’s rate decision further cheered local investors, with the ASX 200 jumping 0.5 per cent immediately.
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