• Prior 1.85%
  • Committed to returning inflation to the 2-3% range over time
  • Inflation expected to increase further over the months ahead
  • Inflation is expected to peak later this year, then decline back towards 2-3% range
  • Central forecast is for CPI inflation to be around 7¾ per cent over 2022, a little above 4 per cent over 2023 and around 3 per cent over 2024
  • Labour market is very tight, wages growth has picked up
  • Household spending remains an important source of uncertainty
  • Price stability is a prerequisite for a strong economy and a sustained period of full employment
  • Further rate hikes is expected but policy is not on a pre-set path
  • Full statement

There isn’t much in this that isn’t expected from the RBA. Markets have priced in a ~46 bps move coming into the decision, so this is fitting with expectations. There are no changes to the language and forecasts on inflation but the RBA added a line in the forward guidance to stress on ‘price stability’. They also removed the reference to ‘normalisation’, which may infer that rates are now in neutral territory.

But the language on rate setting is not changed, as expected, with the central bank maintaining that they will need to raise the cash rate further but reaffirming that policy is ‘not on a pre-set path’.

AUD/USD is little changed on the decision, keeping around 0.6805 at the moment.