Although annual inflation is dropping, at the November board meeting the RBA has elected to raise the cash rate.
It’s a double blow to Melbourne Cup Day punters whose horses didn’t rise to the occasion with the Reserve Bank raising the cash rate by another 25 basis points to 4.35 per cent. Despite consecutive holds in recent months, the first interest rate rise since June doesn’t come as a surprise.
In her statement today Reserve Bank Governor Michele Bullock said, “even though we haven’t raised interest rates since our last interest rate rise in June, we’ve made it very clear that we might need to go again. Although services inflation is declining, it’s still higher than we’re comfortable with. And it’s also reasonably persistent.”
General inflation sits at 5.4 per cent, still higher than the RBA’s preferred 2-3 per cent target.
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