Economist at UOB Group Lee Sue Ann comments on the latest interest rate decision by the RBA.

Key Takeaways

“The Reserve Bank of Australia (RBA) decided to increase the offical cash rate (OCR) by 50bps to 2.35%. It also increased the interest rate on Exchange Settlement balances by 50bps to 2.25%. This is the fourth consecutive month that the RBA has raised rates by 50bps.”

“Once again, the RBA signalled that it will continue to hike in the coming months, but is not on a preset path. We now pencil in 25bps hikes for the remaining three meetings in 2022. That will take the OCR to 3.10% by year-end. We then look for a pause thereafter.”

“The next RBA meeting is on 4 Oct. Immediate focus will now shift to 2Q22 GDP data due on Wed (7 Sep) at 9.30am SGT, where expectations are for the Australian economy to expand by 0.9% q/q or 3.4% y/y.”