The Reserve Bank of Australia announced a +25bp rate hike to 3.6%. As expected.

RBA monetary policy decision and accompanying statement from Governor Lowe.

Full text:

The previous forward directive indicated more than a forward spike, with this:

• The Board expects that further interest rate increases will be required in the coming months.

This guidance today is more moderate, and indicates at least one rally and then an assessment of the data ahead. This high inflation is temporary.

Lowe’s statement downplayed the hawks. His conclusion (Bolding Lee):

• The board expects that More monetary policy tightening will be needed To ensure that inflation is back on target and that this period of high inflation is only temporary. In assessing when and how additional interest rates should be increased, the Board will pay close attention to developments In the global economy, trends in household spending, inflation expectations, and the labor market. The Board remains firm in its determination to bring inflation back to target and will do everything in its power to achieve this.

A touch less extreme.

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Abstract headlines via Reuters:

• The board remains firm in its determination to bring inflation back on target
• The Board expects that further tightening of monetary policy is needed
• The monthly CPI indicates that inflation has peaked in Australia.
• Service price inflation remains high, with strong demand for some services during the summer
• The Governing Council seeks to return inflation to the target range of 2 to 3 percent while keeping the economy at a level, but the path to a soft landing remains narrow.
• Growth in the Australian economy slowed
• There is uncertainty about the timing and extent of a slowdown in household spending
• Household consumption growth has slowed due to tightening financial conditions
• Uncertainties mean that there are a range of possible scenarios for the Australian economy
• The job market remains very tight, although conditions have eased a bit
• Wage growth continues to recover in response to a tight labor market and rising inflation
• Recent data suggests a low risk of a cycle in which prices and wages chase each other
• However, the Governing Council remains alert to the risk of a price-wage spiral, given the economy’s limited spare capacity and historically low unemployment.

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Background to this: