The key points are:
As widely expected, the RBA hikes 0.25% to 4.6%, as upside risks to inflation have “materialised.”
The RBA retained a tightening bias noting that inflation Is “still too high” and that it will do what it considers necessary to achieve its mandate, “including increasing the cash rate target further if needed”.
Our base case is that rates have peaked as the RBA has likely now done enough to weaken demand sufficiently to push inflation back to target by the end of next year.
But with inflation being above target for five of the last six years the RBA is likely to retain a tightening bias for a while to come, so the risk of another rate hike is very high.
