Australia’s central bank suddenly raises interest rates implicitly, signaling changes in global monetary policy

[ad_1]

The Reserve Bank of Australia’s recent surprise rate hike could set a precedent for other central banks.

Recently, the Reserve Bank of Australia (RBA) decided to raise interest rates from 4.1% to 4.35%. This is the first rate increase in five months and the highest level since December 2011.

The move in Australia dealt a heavy blow to the retail sector ahead of Christmas. At the same time, it runs counter to the interest rate trends of Western central banks such as the Federal Reserve. Because the market is preparing for a pause in interest rate hikes, it is expected that these agencies may cut interest rates next year, although inflation will not reach the 2% target.

Currently, Australia’s consumer price index (CPI) remains at 5.4%.

However, Australia’s move could put the country at the forefront of a new wave of interest rate hikes. Since then, it has transformed global monetary policy. This policy change has a profound impact on the entire market, especially on risky assets such as Bitcoin, which has triggered expectations that the Federal Reserve will not raise interest rates further this cycle.

As a result of such unexpected developments, the value of the asset may fluctuate and adjust. However, future market trends still depend on whether other central banks will follow the RBA’s decision or maintain the status quo, thus strengthening the global economic game.

Interest rates are set by the Reserve Bank of Australia (RBA) between December 2022 and November 2023.Source: Trade Economics