6 Dec 2022
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The Reserve Bank of Australia (RBA) Board increased the cash rate by 0.25% to 3.10% at its December meeting.
December 2022 - Article provided by PSK's Chief Investment Officer Chris Lioutas.
The move was expected by markets with participants very much focused on the RBA’s statement for any signs of an end to the current rate hiking cycle.
The RBA still expects inflation to peak around 8% in the December quarter before falling gradually over 2023 and 2024. They also expect the current strong economic growth to slow into 2023 and 2024 with expectations for 1.5% growth in both years.
Unsurprisingly, they reaffirmed their commitment to bringing inflation under control and maintained their expectation to increase rates further over the period ahead, whilst reminding everyone that any further rate decisions will be data dependent.
At this stage, we think at least one more rate rise is likely early next year, with any rate rises thereafter a function of changes in data. Data post the holiday period will be key.
Post the announcement, Australian government bond yields are higher (ie. prices lower), AUD/USD up slightly, and Australian equities have fallen.
As always, if you have any questions or your personal circumstances have changed please do not hesitate to contact your financial adviser
General Advice Warning - Any advice included in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation or needs.
