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The Markets may have pointed to the RBA holding rates, but the board decided to increase by another 25 bsp.

Why?
Well, although inflation in Australia is past its peak, it’s still too high at 7% compared to its target range of 2-3%. With the unemployment rate at a near 50-year low, there is still some likelihood that wage growth will accelerate and make it more difficult to bring inflation under control. If inflation cannot be reduced in a timely manner, there is an elevated risk of economic damage over the longer term.

Will rates increase again?
While the RBA now looks likely to hit the pause button, further policy tightening may be required to ensure inflation returns to target.

For the foreseeable future, strong migration inflows should help the economy to continue growing. However, household consumption is uncertain due to higher debt servicing obligations and cost of living pressures. There is also a lot of talk about rates starting to come down again from November this year – we’ll keep you up to date in the coming months as things continue to develop.