On Tuesday, the Reserve Bank (RBA) Board increased the cash rate by 25 basis points to 2.6%. The move was smaller than the 50-basis point hike expected by markets, triggering sharp reactions in financial markets. Was this the right call?
By slowing down the RBA Board is buying time to help reduce the growing uncertainty over the economic outlook. However, slowing down also increases the risk that inflationary expectation become unanchored. Only time will tell if the RBA has selected the right course.
So, what does all this mean for future Reserve Bank Board meetings?
Watch this short video to find out more:
This document has been created by Westpac Financial Services Limited (ABN 20 000 241 127, AFSL 233716). It provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This information has been prepared without taking account of your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. Projections given above are predicative in character. Whilst every effort has been taken to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not consider known or unknown risks and uncertainties. The results ultimately achieved may differ materially from these projections. This document may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, Westpac Financial Services Limited does not accept any responsibility for the accuracy or completeness of or endorses any such material. Except where contrary to law, Westpac Financial Services Limited intends by this notice to exclude liability for this material. Information current as at 10 December 2021. © Westpac Financial Services Limited 2021.