RBA Puts Brakes on Rate Hikes Amid Inflation Fears

The Reserve Bank of Australia (RBA) may hold off on raising interest rates for now as inflation data is expected to be released this week. According to RBA Governor Michele Bullock, higher interest rates are slowing down the economy as intended.

Bullock expressed concerns that bringing inflation under control could become even harder, citing the past four years of above-target inflation as a cautionary tale for the RBA board. She noted that if the trimmed mean measure of inflation climbs to 3.7% in the June quarter, it would be a long time for the economy to remain above target.

Bullock stated that interest rates are designed to slow demand so that it's more in line with growth in supply and alleviate those pressures. However, analysts expect the RBA might prefer to stay patient and watch the economic downturn caused by three rate hikes since February and a cooling housing market.