Overview
- Economists widely expect the Reserve Bank of Australia to keep the cash rate at 4.35 percent when it decides on Tuesday after two days of board meetings.
- The Bank of England is also forecast to hold its policy rate at 3.75 percent as the Monetary Policy Committee weighs rising energy costs against signs of slowing UK growth.
- The European Central Bank moved in the opposite direction this week by raising rates for the first time in almost three years because it said the conflict was adding inflationary pressure.
- Australian analysts including Westpac warn that banks could still lift mortgage rates in August or September even if the RBA pauses now because past tightening and higher wholesale funding costs are still filtering through.
- Inflation in Australia remains above the RBA’s 2–3 percent target band and recent UK GDP weakness shows domestic data are tempering appetite for more hikes, so central banks say they will watch incoming price, wage and energy data closely.