The Reserve Bank of Australia said quicker inflation and a pickup in wages growth have moved up the likely timing of the nation’s first interest-rate increase since 2010.
The central bank said in minutes of its April policy meeting that annual core inflation in the first three months of this year was likely to be above the top of its 2-3% target. Policy makers also noted that wages growth had picked up.
“These developments have brought forward the likely timing of the first increase in interest rates,” the RBA said Tuesday. “Over coming months, important additional evidence will be available on both inflation and the evolution of labor costs.”
The currency ticked higher and and three-year government bond yields climbed as the minutes reinforced the RBA’s more hawkish message from its April 5 meeting. At the time, it scrapped a reference to remaining “patient” on policy and signaled inflation on April 27 and wages on May 18 will be key readings.
Australia’s shift reflects a hawkish turn among central banks worldwide as they struggle to cool consumer prices fueled by pandemic-era stimulus and exacerbated by Russia’s war on Ukraine. South Korea and Singapore tightened on Thursday after Canada and New Zealand implemented jumbo half-percentage point hikes the day before.
“An updated set of bank forecasts will be published in May,” the RBA said in the minutes. “The speed of the resolution of the various global supply-side issues, developments in global energy markets and the evolution of overall labor costs were key sources of uncertainty about the inflation outlook.”
(Updates with further details.)
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Source: Economy - investing.com
