In response to strong inflation figures, the Reserve Bank of Australia (RBA) is preparing for a 25 basis points increase in the cash rate to 4.35% at the upcoming November board meeting. The decision comes as the headline Consumer Price Index (CPI) for Q3 2023 recorded a growth of 1.2%, with the annual rate declining to 5.4%.
The trimmed mean, a measure that RBA often favors due to its exclusion of volatile items, also witnessed a similar rise of 1.2% in Q3, resulting in an annual rate decrease to 5.2% from the second quarter's 5.9%. This metric provides a more consistent picture of underlying inflation trends.
The Governor of RBA, Bullock noted that significant upward adjustments in inflation estimates could trigger additional cash rate increases in the future. This indicates that the central bank is closely monitoring inflation trends and is prepared to take necessary actions to maintain economic stability.
The proposed rate hike is part of RBA's ongoing efforts to manage inflation within its target range while ensuring sustainable economic growth. The decision will be finalized during November's board meeting, with market participants keenly observing for any further indications on monetary policy direction.
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