The latest meeting minutes report from the Australian Central Bank (RBA) shows the central bank has paved the way to start tightening in its monetary policy.
Following the April edition of the policy meeting, Governor Philip Lowe has clearly deleted his previous statement to be patient with his approach to policy.
He also said that some important additional evidence will be available on both inflation and the evolution of labor costs in the coming months.
According to Westpac, this indirectly indicates that policymakers will maintain interest rates at the May meeting but are ready to move on to the next meeting which is on June 7.
Further evidence that the start of the rate hike cycle is fast approaching is where the actions of other major central banks, including the United States to curb inflation, are given more emphasis than the previous meeting minutes report.
In addition, Westpac also expects a 15 basis point increase in interest rates in June, with a 25 basis point increase at most subsequent meetings in 2022 and reaching 1.25% by the end of the year.
Expectations of tightening from the RBA have provided little support for the Aussie dollar to rise but price movements are limited by the strong US dollar.
