Sydney Australia skyline

Australia Monetary Policy November 2023

Australia: After four holds, RBA hikes in November

At its monetary policy meeting on 7 November, the Reserve Bank of Australia (RBA) hiked the official cash rate (OCR) to 4.35% from 4.10%. The decision follows four consecutive meetings in which the Bank stood pat and translates into a cumulative 425 basis point increase in the OCR since May 2022.

The Bank decided to tighten the monetary policy stance due to the slower-than-expected decline of inflation towards its 2.0–3.0% target range. The Bank now sees inflation hovering at around 3.5% by the end of 2024 and expects it to decline to the upper bound of the target range in late 2025.

The Bank maintained a hawkish tone in its communiqué, stating that it “remains resolute in its determination to return inflation to target [within a reasonable timeframe] and will do what is necessary”. The path of future monetary policy will depend on data and the evolving outlooks for inflation, household spending, the labor market and the global economy. Our panelists expect the RBA to start easing its policy stance next year as inflation moderates.

The next monetary policy meeting is scheduled for 5 December.

Commenting on the outlook, ING’s Robert Carnell stated:

“If … [inflation doesn’t slow down considerably over the coming months], then instead of the rate cuts that we expect could be on the radar by mid-2024, we might still be looking at some further tightening before we can call this rate cycle truly over. As the RBA notes in their statement, ‘There are still significant uncertainties around the outlook’”.

Meanwhile, Alvin Liew, senior economist at UOB, said:

“Following today’s expected hike and the more dovish-sounding policy guidance in November, we keep our RBA policy outlook unchanged. We expect the RBA to keep the peak policy rate of 4.35% for December and Q1 2024. Thereafter, we expect the first rate cut to take place in Q2 2024. We are penciling a total of 85-bps cuts next year to bring the RBA cash rate to 3.5% by Q4 2024.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest