RBA hikes the OCR by 25 bps, as expected – UOB

Lee Sue Ann, Economist at UOB Group, comments on the latest RBA interest rate decision (February 7).

Key Takeaways

“The Reserve Bank of Australia (RBA) decided to increase the cash rate target by 25bps to 3.35% at its first meeting of the year. Taking into account today’s move, the RBA has raised the cash rate by 325bps since May 2022.”

“The RBA stated that its priority is to return inflation to target, and that further increases in interest rates will be needed over the months ahead. We are penciling in another two more 25bps hike, which will take the OCR to 3.85%, before looking for a pause.”

“That said, the releases of 4Q22 wage price index later this month on 22 Feb and 4Q22 GDP on 1 Mar will be closely watched. Before that, the RBA will be releasing its Statement of Monetary Policy (SoMP) coming Fri (10 Feb).”