RBA Raises Cash Rate Target 50bps To 2.35%

By Sophia Rodrigues

(Sydney, September 6, 2022)—The Reserve Bank of Australia raised the cash rate target by 50 basis points to 2.35% and issued a hawkish statement that points to the risk of more hikes.

The RBA said the latest hike will help bring inflation back to target and create a more sustainable balance of demand and supply in the Australian economy. But more hikes are expected over the months ahead, it added.

In a message of its continued hawkishness, the RBA said it is committed to returning inflation to the 2% to 3% range over time.

“Price stability is a prerequisite for a strong economy and a sustained period of full employment,” the RBA said

On growth, the RBA notes the economy is continuing to grow strongly, with national income being boosted by the record level of the terms of trade.

The labor market is very tight and both job vacancies and job ads are at very high levels, it added.

The RBA reiterated that behaviour of households remains an important source of uncertainty and it is watching how the various factors affecting household consumption balance out.

--Contact: Sophia@centralbankintel.com