Australia: The Federal Reserve of Australia adjusted its guidance to stop raising interest rates.


■ The Board of Directors of the Federal Reserve of Australia decided to raise the interest rate by 0.25% and increase the policy interest rate to 3.60%
■ The interest rate increase in April is expected to continue by 0.25%, but the policy guidance has been adjusted in the follow-up adjustment expectation

  The Reserve Bank of Australia (RBA) decided to raise the policy interest rate by 0.25% to 3.60% at the board meeting on the 7th. Since May 2022, the interest rate has been raised for the 10th time in a row, and the increase rate remains unchanged at 0.25%. In the minutes of the meeting of the Board of Governors of the Federal Reserve of Australia (held on February 7) released on February 21, it was clearly discussed that the rate increase would be expanded to 0.50%. The report pointed out that the inflation of the consumer price index (CPI) had peaked and would slow down in the coming months, indicating that there was no need to speed up the rate increase again. As for the future policy, it said that "further tightening of monetary policy will be needed", although it said that the policy of further tightening was revised from the last "further increases in interest rates will be needed over the months ahead". In the case of inflation still exceeding the standard, on the one hand, it maintained the policy stance of tightening, on the other hand, it also avoided further interest rate increase, and left the option of stopping interest rate increase according to the future situation.

  The Monetary Policy Report (SMP) released in February predicted that with the peak of last December, the inflation rate would slow down, while the growth rate would decline and the unemployment rate would rise. The economic indicators released after the meeting of the Board of Directors of the Federal Reserve of Australia in February confirmed that the Australian economy and prices were roughly following this forecast. Considering the time difference and cumulative effect of the chain reaction of monetary policy, it is expected that the monetary tightening policy will continue in April, with an interest rate increase of 0.25% as the center. This adjustment of policy orientation is considered to be a change in the expectation of policy revision after May after reaching the same level.

  In his speech on the 8th, Reserve Bank of Australia Governor Lowe clarified that "to assess the economic situation, we discussed whether it is close to the right time to stop raising interest rates." He also said that depending on the future monthly economic indicators, it is also possible to choose to stop raising interest rates in April. As Australia's economic and price indicators begin to weaken, they can be sorted out as the policy interest rate freeze under the level of economic restraint. The scope for flexible adjustment of monetary policy is expanding and can be better sorted out.