Market Musing, Asia Pacific

For the second straight meeting the RBA kept the cash rate steady at 4.35% today. This follows the rapid fire recalibration in interest rates that was pushed through earlier in the year. No change was widely anticipated with traders assigning a less than 5% chance of a move today and no surveyed analyst forecasting it. The decision to stand still was a unanimous Board vote. According to the RBA, the impact of the Middle East conflict on inflation “has so far been less than expected”, yet headline inflation is “still too high” and trimmed mean “remains elevated”. But at the...

After delivering three consecutive interest rate hikes to start the year, as expected, the RBA kept the cash rate steady at 4.35% today. The decision was “unanimous” as the RBA Board steps into a “hold-and-assess phase” after recalibrating the level of interest rates to a more “restrictive” setting over Q1/Q2 2026. According to the RBA, inflation is still “too high”, yet at the same time financial conditions have “tightened”, there are signs “growth in consumer spending is slowing”, momentum in the housing market “has shifted”, and unemployment was “higher than expected” in the recent jobs report (charts 1 and 2)....

The RBA continues to take few chances when it comes to the problematic domestic inflation trends with another interest rate hike announced today. This is the third consecutive meeting the RBA has tapped on the brakes with the latest 25bp increase moving the cash rate up to 4.35%. Policy settings have been recalibrated quickly. The interest rate ‘relief’ delivered last year has been unwound with the cash rate back at the ‘peak’ reached in the 2023/24 inflation fight. Today’s decision wasn’t unanimous with the RBA Board voting 8-1 in favour of a hike. It was a matter of when, not...

After being ‘strategically timid’ during its last tightening cycle the RBA looks to be taking fewer chances when it comes to its renewed battle against inflation with another 25bp rate hike announced today. This follows the rate rise delivered at the last meeting in February and lifts the cash rate back up to 4.1%, just 25bps off the ‘peak’ reached in the 2023/2024 inflation fight (chart 1). Today’s decision wasn’t unanimous with the RBA Board voting 5-4 in favour of a hike. This was more evenly split than anticipated with markets pricing in a ~70% chance of a move. It...