MNI BRIEF: RBA Says Rate Rise "Brought Forward"

Higher inflation and wages growth have “brought forward the likely timing” of a rise in official interest rates, according to the minutes of the April meeting of the board of the Reserve Bank of Australia released on Tuesday.

The minutes show the central bank expects further increases in inflation, with measures of underlying inflation in the March quarter “expected to be above 3%.” Underlying inflation in the fourth quarter of 2021 was at 2.6%, see: MNI INSIGHT: Market Rates Pricing Races Ahead But RBA Cautious.

The RBA minutes show however that a pick up in wages was still “below rates consistent with inflation being sustainably at the target.”

At the April meeting the RBA maintained the official cash rate at the record low of 0.10%, but its statement omitted the comment that it was prepared to be “patient” on the timing of the next rate rise. Until April, the RBA said a rate rise was only “plausible” this year, but there are now growing expectations that the RBA will move on rates in June after the May 21 federal election.