SYDNEY (Reuters) – The Reserve Bank of Australia is set to raise interest rates again in a bid to curb blistering inflation, but with rates near normal levels, there are reasons to slow the pace.
The minutes of the Reserve Bank of Australia’s (RBA) September board meeting on Tuesday reiterated that policy is not on a pre-set path, but will be balanced in an effort to keep the economy steady.
“All other things being equal, members believe that as the level of the cash rate rises, the case for a slower pace of rate hikes is growing stronger,” the minutes showed.
The central bank raised the cash rate by 35 basis points to 2. at its September 6 meeting )%, which is the fifth month of rate hikes so far, a total increase of basis points.
Markets are betting on another half-point rate hike in October, partly to keep up with the Fed, which is widely expected to hike rates this year 75 bps
RBA Governor Philip Lowe says rate hikes may slow at some point, but also emphasises keeping inflation expectations in place in a very tight labour market The importance of stability.
The Fed’s emphasis on inflation and a hawkish outlook led Westpac chief economist Bill Evans to raise his rate forecast, who now expects rates to rise by half a percentage point in October instead of 35 basis points.
He also expects 25 basis points of rate hikes in November, December and February, bringing rates to a peak of 3.6%.
“Clear evidence of a slowdown in inflation expectations won’t come until late February, allowing the RBA to remain on hold in March as there is evidence that economic growth is slowing and that inflation and Interest rates are also in the U.S.,” Evans said.