Technical Analysis

RBA Oct. minutes: More interest rate hikes ahead – “Rates not especially high”

Eamonn Sheridan

The Australian dollar has ticked up a little on that ‘rates not especially high’ point in the October minutes.

Headlines via Reuters:

  • Decision to raise rates by only 25bp was “finely balanced”
  • Smaller move warranted by the scale of hikes already delivered, lags in policy
  • The full impact of hikes yet to be felt in mortgage payments, wealth effect from falling house prices
  • Higher rates abroad are likely to “significantly lower” global growth, lessen inflation
  • Uncertain outlook argued for slower hikes for a time, would help hold public attention
  • Further increases in rates are likely over the period ahead, rates not “especially high”
  • Board emphasised the importance of keeping inflation expectations anchored
  • Some further rise in wage growth would not be a concern if inflation expectations anchored
  • Monthly CPI data confirmed a broad-based pick up in inflation, rents and utilities are expected to rise further
  • Data suggest household consumption held up well in Q3, supported by very tight labour market
  • A$ is still up on the year in trade-weighted terms, more important for inflation than the AUS/USD level

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