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RBA to keep rates at 3.85% in June, but may hike again soon: Reuters poll

By Devayani Sathyan

BENGALURU (Reuters) – Australia’s central bank will keep its key interest rate unchanged at 3.85% on Tuesday despite inflation Remaining well above the target range, economists polled by Reuters are divided on when and where rates will peak this year. , confounding financial markets and most economists who expect central banks to hold money.

So far, there is little evidence that inflation will fall to the RBA’s 2% to 3% target range anytime soon, RBA Governor Philip Lowe said in his latest meeting with lawmakers. “We have work to do,” he said in an appearance.

But while expectations for future rate hikes were buoyant, three-quarters of strong performances were strong for most economists, or 22 of 22, the RBA is forecast to keep its official cash rate at 3.85% June 6th.

All major local banks – ANZ, CBA, NAB and Westpac – are expected to be suspended on Tuesday.

Eight remaining respondents in polls conducted between May 28 and June 1 expected a rate hike 22 basis points. At that time, interest rate futures were pricing in about a one-third chance of a rate hike.

Target range

Slowed down the pace of hikes. Having raised rates in May after pausing in April, we’re not sure the data support them for a hike in June as soon as possible, although we still expect another (one) hike,” NAB economist Taylor Nugent said. “We think the RBA will act again before August. “

Inflation has remained at or above the upper end of the central bank’s target range since June 2021.

Latest monthly Annual price growth accelerated to 6.8% in April from 6.3% in March, data showed. On a quarterly basis, inflation was last reported at 7.0%, with the next set of data due in July.

While many say rates will still need to rise, there is no clear consensus on where the cash rate will be at the end of the third quarter, and a poll conducted last month has been divided.

Some analysts cited the stop-start approach the central bank has taken in recent months as causing confusion over how much, if any, rate hikes are needed.

More than half of respondents Or, or 28 of 22 is expected to reach 4 by the end of September. % or higher, including four at 4.30%. The rest Rates are expected to remain at 3.85%.

“If inflation data is stronger than the RBA’s forecast, then they Likely to honor the rate hike bias. So in the next two to three meetings, there is a clear risk that they will raise rates on (the) cash rate,” said Gareth Aird, head of economics at CBA Australia.

The economy has stalled this year, compared with the near-double-digit decline forecast three months ago.

(Additional coverage from Reuters Global Long-Term Economic Outlook Survey package is available at this link turn up.)



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