The Reserve Bank of Australia (RBA) has decided to increase interest rates in order to ensure that inflation returns to its target range within a reasonable timeframe. The RBA stated that services price inflation has been persistently high overseas and could occur in Australia as well. Although wages growth has picked up over the past year, it is still consistent with the inflation target. The RBA also expressed concerns about the risk of inflation remaining higher for longer and the uncertainties around the economic outlook. The RBA expects CPI inflation to be around 3.1% by the end of 2024 and at the top of the target range of 2 to 3% by the end of 2025. Meanwhile, the Bank of Canada (BOC) minutes revealed that some senior officials believe rates will eventually need to climb, and further tightening may be required to restore price stability. BOC council members also discussed the impact of global financial conditions and government spending on inflation. They noted that high inflation could become entrenched due to persistence in core inflation, elevated inflation expectations, wage growth, and atypical corporate pricing behavior. The BOC agreed to revisit the need for a rate hike in future decisions and stated their preparedness to raise the rate further if needed. There was a strong consensus to hold the policy rate at 5% for now.
Some Bank of Canada governors saw likely need for higher rates - minutes https://t.co/HozmPQrfv0 https://t.co/rFBtJlRXCY
π¨π¦ BANK OF CANADA MINUTES: https://t.co/21qA83o5O2
π΄ BOC MINUTES: THE NEAR-TERM INFLATION EXPECTATIONS HAVE BEEN EASING; LONG-TERM INFLATION EXPECTATIONS REMAIN WELL-ANCHORED.
π΄ BOC MINUTES: IF GLOBAL FINANCIAL CONDITIONS TIGHTEN FURTHER OR PAST HIKES RESTRAIN DEMAND MORE THAN EXPECTED, ECONOMY COULD BE WEAKER AND INFLATION LOWER THAN PROJECTED.
π΄ BOC MINUTES: COUNCIL MEMBERS FELT FEDERAL AND PROVINCIAL GOVERNMENT SPENDING COULD GET IN THE WAY OF RETURNING INFLATION TO TARGET.
π΄ BOC MINUTES: OTHER COUNCIL MEMBERS FELT 5% RATE WOULD BE LIKELY BE ENOUGH TO BRING INFLATION DOWN TO 2% TARGET PROVIDED IT WAS MAINTAINED AT THAT LEVEL FOR LONG ENOUGH.
π΄ BOC MINUTES: THERE WAS A STRONG CONSENSUS THAT WITH CLEARER EVIDENCE OF HIGHER RATES HAVING THE DESIRED EFFECT, GOVERNING COUNCIL SHOULD BE PATIENT AND HOLD POLICY RATE AT 5%.
π΄ BOC MINUTES: COUNCIL MEMBERS AGREED TO REVISIT NEED FOR RATE HIKE AT FUTURE DECISIONS WITH BENEFIT OF MORE DATA, AGREED TO STATE CLEARLY THEY WERE PREPARED TO RAISE THE RATE FURTHER IF NEEDED.
π΄ BOC MINUTES: LACK OF DOWNWARD MOMENTUM IN UNDERLYING INFLATION CAUSED CONSIDERABLE CONCERN; THIS COULD EITHER MEAN MONETARY POLICY NEEDED MORE TIME TO WORK, OR THAT IT WAS NOT RESTRICTIVE ENOUGH.
π΄ BOC MINUTES: COUNCIL MEMBERS AGREED OVERALL INFLATIONARY RISKS HAD INCREASED, GIVEN HIGHER NEAR-TERM FORECAST FOR INFLATION, PERSISTENT CORE INFLATION AND RISK OF HIGHER OIL PRICES.
BANK OF CANADA MINUTES: 'SOME' SENIOR OFFICIALS BELIEVED RATES WOULD NEED TO EVENTUALLY CLIMB
π΄ BOC MINUTES: PERSISTENCE IN CORE INFLATION, ELEVATED INFLATION EXPECTATIONS AND WAGE GROWTH, AND ATYPICAL CORPORATE PRICING BEHAVIOR COULD INDICATE HIGH INFLATION IS BECOMING ENTRENCHED.
π΄ BOC MINUTES: COUNCIL MEMBERS ACKNOWLEDGED FURTHER TIGHTENING WOULD LIKELY BE REQUIRED TO RESTORE PRICE STABILITY.
π΄ BOC MINUTES: AHEAD OF BANK OF CANADA'S RATE ANNOUNCEMENT, SOME MEMBERS OF GOVERNING COUNCIL FELT RATE WOULD MORE LIKELY THAN NOT NEED TO INCREASE FURTHER.
π΄ RBA: THE WEIGHT OF INFORMATION SUGGESTS THAT THE RISK OF INFLATION REMAINING HIGHER FOR LONGER HAS INCREASED.
π΄ RBA: WAGES GROWTH HAS PICKED UP OVER THE PAST YEAR BUT IS STILL CONSISTENT WITH THE INFLATION TARGET, PROVIDED THAT PRODUCTIVITY GROWTH PICKS UP.
π΄ RBA: HIGH INFLATION IS WEIGHING ON PEOPLEβS REAL INCOMES AND HOUSEHOLD CONSUMPTION GROWTH IS WEAK, AS IS DWELLING INVESTMENT.
π΄ RBA: TO DATE, MEDIUM-TERM INFLATION EXPECTATIONS HAVE BEEN CONSISTENT WITH THE INFLATION TARGET AND IT IS IMPORTANT THAT THIS REMAINS THE CASE.
π΄ RBA: SERVICES PRICE INFLATION HAS BEEN SURPRISINGLY PERSISTENT OVERSEAS AND THE SAME COULD OCCUR IN AUSTRALIA.
π΄ RBA: THERE ARE STILL SIGNIFICANT UNCERTAINTIES AROUND THE OUTLOOK.
π΄ RBA: WHETHER FURTHER TIGHTENING OF MONETARY POLICY IS REQUIRED TO ENSURE THAT INFLATION RETURNS TO TARGET IN A REASONABLE TIME FRAME WILL DEPEND UPON THE DATA AND THE EVOLVING ASSESSMENT OF RISKS.
π΄ RBA: THE BOARD JUDGED THAT AN INCREASE IN INTEREST RATES WAS WARRANTED TODAY TO BE MORE ASSURED THAT INFLATION WOULD RETURN TO TARGET IN A REASONABLE TIMEFRAME.
π΄ RBA: CPI INFLATION IS NOW EXPECTED TO BE AROUND 31% BY THE END OF 2024 AND AT THE TOP OF THE TARGET RANGE OF 2 TO 3% BY THE END OF 2025.
π΄ RBA: THE BOARD REMAINS RESOLUTE IN ITS DETERMINATION TO RETURN INFLATION TO THE TARGET.