Page 2 - November Statement News Today : Breaking News, Live Updates & Top Stories | Vimarsana

As we expected, the RBA Board kept rates on hold following its December meeting. Information received since the previous meeting in early November was considered ‘broadly in line’ with their expectations. The Governor’s decision statement emphasised that inflation continues to moderate, driven by the goods sector. Ahead of its meeting in February 2024, the Board will be focused on the December quarter CPI result. If inflation does not decline as the RBA intends, the Board will respond with increased rates. But this is not the most likely outcome.

This week, the RBA Board opted to raise the cash rate by 25bps to 4.35%. As detailed by Chief Economist Luci Ellis, this decision marked a direct response to persistence in inflation and upside risks to the outlook. The underlying tone of the real economy has shifted in recent months, the household sector exhibiting resilience against intense interest rate and cost-of-living pressures. This has, in part, contributed to the more worrisome inflation outlook, with the Board noting that “the prices of many services are continuing to rise briskly” and, regarding inflation’s return to target, ...

As we expected, the RBA Board raised the cash rate target by ¼ percentage point to 4.35%. Their inflation outlook is stronger, and so is their outlook for the labour market. But follow-up increases in rates are far from assured.

The big question is whether the RBA can resist political interference to lift the cash rate in November.

RBA Governor Michele Bullock knows that excessive rate rises historically cause a recession and it’s why she shouldn’t even think of more rises.