An interest rate cut is widely expected in September in the US but in Australia, many commentators predict a rate rise before cuts.
The RBA left interest rates unchanged at 4.35% at its June meeting but news that annual CPI was up by 4.0% in May compared with 3.6% in April. This will give the RBA cause for concern, with the targeted inflation rate being 2–3 per cent.
According to the RBA website, a 2-3 per cent inflation rate does not materially distort economic decisions in the community. Seeking to achieve this rate, on average, provides discipline for monetary policy decision-making, and serves as an anchor for private-sector inflation expectations.
Reference: https://www.rba.gov.au/inflation/measures-cpi.html
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