RBA: Hiking pace will slow ‘at some point’ as rate rises

Bloomberg

Australia’s central bank chief Philip Lowe said the case for outsized interest-rate increases has “diminished” now that the cash rate is approaching “more normal settings,” suggesting smaller moves ahead.
The Reserve Bank’s board will debate the merits of hiking by a quarter-percentage point or a half-point at its October 4 meeting, Governor Lowe said in response to Australian lawmakers’ questions in semi-annual testimony.
“The fact that we’ve raised interest rates quite a lot already increases the strength of the argument for smaller increases going forward,” Lowe told a parliamentary panel.
“We are closer to a normal setting now which means that the case for large adjustments in interest rates is diminished.”
Lowe’s comments came even after stronger-than-expected US inflation this week fueled speculation the Federal Reserve may adopt even more aggressive monetary tightening.
Yet economists had largely factored in a downshift in the scale of RBA hikes going forward, expecting quarter-point moves following four successive half-point increases, so market reaction was muted.
Money markets reckon the RBA will remain aggressive, pricing in a cash rate of 3.3% by year’s end, from 2.35% at present, and a peak of 3.8%
in 2023.