The Reserve Bank of Australia said faster inflation and accelerating wage growth have pushed the likely timing of the country’s first rate hike since 2010.
The central bank said in the minutes of its April policy meeting that core annual inflation in the first three months of this year was likely to be above the top of its target of 2-3%. Policymakers also noted that wage growth had picked up.
“These developments have pushed forward the likely timing of the first rate hike,” the RBA said Tuesday. “In the coming months, important additional evidence will become available on both inflation and labor cost evolution.”
The currency ticked higher and three-year government bond yields climbed as the minutes reinforced the more aggressive message from the RBA from its April 5 meeting. At the time, it deleted any reference to staying “patient” with policy and signaled inflation on April 27 and wages on May 18 will be the key metrics.
The shift in Australia reflects an aggressive turn among central banks around the world as they struggle to cut consumer prices, fueled by pandemic-era stimulus and exacerbated by Russia’s war on Ukraine. South Korea and Singapore tightened on Thursday after Canada and New Zealand passed jumbo increases of half a percentage point the day before.
“An updated set of banking forecasts will be released in May,” the RBA said in the minutes. “The speed with which the various global supply-side problems are resolved, developments in global energy markets and the evolution of total labor costs have been important sources of uncertainty about the inflation outlook.”
(Updates with more details.)
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