Monetary Policy

As you are no doubt aware the RBA lifted the cash rate by another 25 points yesterday. Their press release can be accessed here and it gives a good summary of where they see the global and domestic economy at the moment.

I always find the last two paragraphs very illuminating and have pasted them below. My take is, given they say "closer to average" that they will pause to assess the situation soon after they reach 4.50%

With the risk of serious economic contraction in Australia having passed some time ago, the Board has been lessening the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker. Lenders have generally raised rates a little more than the cash rate.

Interest rates to most borrowers nonetheless have been somewhat lower than average. The Board judges that with growth likely to be around trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average. Today’s decision is a further step in that process.