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MNI INSIGHT: RBA Now Data Driven As Guidance Suspended

SYDNEY (MNI)

Credible forecasts are overtaken by events.

Forecasts made in the May Statement on Monetary Policy and comments by RBA Governor Philip Lowe on the likely path of interest rate rises have been overtaken by more recent events and made credible forward guidance impossible, MNI understands.

The Reserve Bank of Australia announced a hawkish surprise this week, hiking rates by 50 basis points to 0.85% in the biggest move in more than 20 years and moving away from any forward guidance to a policy which the bank said would be “data driven," (see MNI STATE OF PLAY: RBA Turns Hawk In Biggest Hike Since 2000).

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Forecasts made in the May Statement on Monetary Policy and comments by RBA Governor Philip Lowe on the likely path of interest rate rises have been overtaken by more recent events and made credible forward guidance impossible, MNI understands.

The Reserve Bank of Australia announced a hawkish surprise this week, hiking rates by 50 basis points to 0.85% in the biggest move in more than 20 years and moving away from any forward guidance to a policy which the bank said would be “data driven," (see MNI STATE OF PLAY: RBA Turns Hawk In Biggest Hike Since 2000).

Keep reading...Show less