Reserve Bank of Australia on Tuesday moved from its extraordinary pandemic lead stimulus measures of targeting low bond yield and signaled earlier cash rate hike.
The central bank on Tuesday announced to maintain cash rate at 0.1% and moved away from targeting 0.1% for the April 2024 government bond.
Given steady economic recovery and elevated inflation, the regulator moved from its earlier projection of not hiking rates until 2024. Pressure on rate hikes intensified after last week data showed inflation jumped back to 2-3% target band two years earlier than forecasted. However, the central bank pressed inflation was still low.
Weekly asset purchase program would continue at a pace of A$4 billion until at least mid-2022.
Governor Philip Lowe in a statement said, “The Board is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2.5% at the end of 2023 and for only a gradual increase in wages growth,”.