Lates News

The Reserve Bank of Australia will hold its second interest rate meeting of the year this week. The existing inflation problem in the country has been exacerbated by the soaring energy prices triggered by the conflict in the Middle East. Economists expect the bank to raise interest rates on Tuesday to combat the expected rise in prices caused by the increase in oil prices, raising the cash rate to 4.1%. The money market believes there is a 75% chance of a rate hike in March and anticipates further tightening in the future. Nick Stanway, an economist at Bank of America, said, "The conflict in Iran poses a significant risk of inflation rising, and we expect the overall inflation rate to approach 5%." Australia's inflation target is 2-3%. Stanway pointed out that considering the current price pressures and tight labor market, the central bank has "almost no room for maneuver." If there is no rate hike in March, it "could lead to more severe tightening in the future because high inflation will persist longer and affect public expectations."