a practical guide to Reserve Bank interest rate hikes

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If you want to know what the Reserve Bank will be watching to know how quickly to apply the economic brakes, here is a useful guide.

(Image: Private Media)

With the Reserve Bank of Australia (RBA) intent on hitting the economy to suppress inflation before it takes hold in the domestic economy, it will be watching economic indicators closely to guide it over time. and the force with which it should hit households and small businesses.

“The size and timing of future interest rate increases will be guided by incoming data and the Board’s assessment of the outlook for inflation and the labor market,” Governor Philip Lowe said in his post statement on Tuesday. -meeting after increasing rates by 0.5%. “The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time…the Board will pay particular attention to these various influences on consumption when assessing the appropriate framework. monetary policy.”

This means the RBA will be watching every bit of data in the coming months before deciding how big the next rate hike will be. But some data will be more important than others.

Learn more about rising interest rates in Australia.

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