The Reserve Bank of Australia (RBA) has likely concluded its most aggressive interest-rate hike campaign of the year, according to economists and money managers. The central bank raised the cash rate to a new 18-year high of 4.85% this week, signaling a potential pause in its tightening efforts. A split decision among the RBA’s nine-member board and the removal of an explicit tightening bias further supported this view.
Reports of tensions within the RBA’s policy-setting board emerged, particularly over staff communications ahead of the November 2-3 meeting. Fifteen senior economists and a handful of money managers surveyed all anticipate the RBA will now shift to the sidelines. The divisions on the board highlight the challenges of navigating a complex economic landscape.
The RBA’s decision to raise rates to 4.85% marks the culmination of a series of hikes aimed at curbing inflation. However, the lack of a clear tightening bias suggests the bank may be cautious about further increases. The shift to a more neutral stance could provide some relief to markets and borrowers, who have faced rising costs amid the tightening cycle.