Inflation has slowed down, but it will take about two years before it returns to the target range of 3%. RBA expects inflation to decline to 4.5% by the end of 2023
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We asked Serhii Zhdanov to comment on Reserve Bank of Australia decision. Central bank decided to lift up the rate by 25bp.
Serhii Zhdanov (EXMO.COM): RBA raised its cash rate by 0.25% to 3.85%. According to the regulator, inflation in Australia is still too high at 7%. The indicator has slowed down, but it will take about two years before it returns to the target range of 3%. RBA expects inflation to decline to 4.5% by the end of 2023. This represents a clear risk for the country's economy. The stability of inflation is due to a tight labour market (the unemployment rate stands at 3.5%), the continued increase in housing rental prices, pressure on labour and non-labour resources, as well as strong market demand. All these factors push regulators for more decisive measures to fight inflation, so further tightening of monetary policy is likely.
According to the bank's forecasts, GDP will increase by 1.25% this year and grow by another 2% by mid-2025
Serhii Zhdanov (EXMO.COM): It is expected that by the end of the first half of 2023, the interest rate will be raised from 3.85% to 4.1%, and by the end of the year it will stand at 4.35%. According to the bank's forecasts, GDP will increase by 1.25% this year and grow by another 2% by mid-2025.
