Overview
- The Reserve Bank of Australia raised its cash rate to 4.85%, its highest level in 18 years, and Deputy Governor Andrew Hauser said on Tuesday that survey data show Australians’ near‑term confidence in the RBA has fallen materially.
- Hauser warned that weaker trust makes disinflation more costly because people and businesses may demand higher wages or set higher prices, forcing the bank to raise rates more aggressively to re‑anchor expectations.
- The Bank of England this week increased its Bank Rate to 4% in a unanimous vote as officials cited higher energy costs and the risk of second‑round pay and price effects that could embed inflation.
- Federal Reserve officials including John Williams and Mary Daly stressed a data‑driven approach and left open the possibility of further hikes if inflation stays too high, while markets weigh energy shocks against a deepening tech selloff.
- Higher policy rates are already raising mortgage payments and business borrowing costs, and central banks say they face harder trade‑offs between cooling inflation and avoiding a sharper slowdown in household spending and investment.