Decorating the trading of the Asian session on Tuesday was the release of the minutes report of the Reserve Bank of Australia (RBA) policy meeting for July which has raised interest rates by 50 basis points to 1.35%.
Here are some details on the upcoming policy approach revealed in the minutes:
Policymakers remain committed to doing whatever it takes to ensure inflation in Australia returns to target over time.
Agreed that further steps should be taken to normalize the monetary situation in the coming months.
Policymakers are considering the possibility of raising interest rates by 25 or 50 basis points.
Admit that interest rate levels are still very low for an economy with a tight labor market and facing higher inflation risks.
Inflation is expected to peak in 2022 and decline again around the 2 to 3 percent target range in 2023.
Higher interest rates will help create a more sustainable balance between demand and supply of goods and services.
Overall, there is nothing surprising from the RBA’s new decision that has indeed been widely anticipated by investors.
Still, the RBA’s statement that the central bank will take further steps in the next few months suggests that policymakers will continue to be hawkish in raising rates and fighting inflation.
The initial reaction of the Aussie dollar following the release of this minute’s report, showed the currency traded higher.
