Interest rates May meeting update

Rates remain unchanged by the Reserve Bank in May whilst opinion is divided over timing of next move..

The Reserve Bank has indicated in May that its pause on interest rate hikes is nearing an end, saying despite problems in some sections of the economy, monetary policy must be set for all of Australia.

The Reserve Bank released its board meeting minutes, which said while its current 4.75% rate is “appropriate” and “mildly restrictive”, the moderation in inflation looks to have run its course, and if economic conditions continue to play out as expected, higher interest rates were likely to be required.

Does this mean a rise next month in June or not? The market is unsure about whether this means a lift next month. ANZ says that while the central bank was continuing to “jawbone” the market to price for a more aggressive monetary policy path, a June rise is no done deal, particularly if today’s wages data come in weaker than expected.

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