The RBA’s decision to raise official interest rates by 0.25% to 3.5% didn’t surprise anyone, but economists and businesses are now focused on the next move. Will the RBA lift rates again in the first week of December, just weeks out from the most important trading period of the year?
It seems a bit of detective work is required, and some very close reading of Governor Glenn Steven’s statement following the meeting.
While some economists have argued that the RBA was becoming increasingly concerned with rising house prices and rising inflation, there appeared to be a slight change in the rhetoric yesterday.
Of particular importance was this line from Stevens: “With the risk of serious economic contraction in Australia now having passed, the Board’s view is that it is prudent to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker.”
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Economists say the use of the term “gradually” shows the RBA is not in a mad rush to push rates higher.
“One of the key indicators which we have tracked was the use of the word