Financial markets downgraded their forecasts for interest rate rises next year following perceived dovish comments from RBA deputy governor Michele Bullock on Thursday.
Financial markets downgraded their forecasts for interest rate rises next year following perceived dovish comments from Reserve Bank of Australia deputy governor Michele Bullock on Thursday.
RBA deputy governor Michele Bullock, with assistant governor Christopher Kent, was pressed to accept responsibility for the bank’s incorrect forecasts on inflation and rate settings.National Australia Bank head of market economics Tapas Strickland said the comment sparked a market repricing of interest rate expectations.
Mr Strickland said a quarter-point rate rise at the central bank’s December board meeting was still almost certain, with the eighth straight increase in the official interest rate taking it from 0.1 per cent in May to 3.1 per cent.A February rate rise is also on the cards, but investors downgraded their expectations for more increases in March and April. NAB has the cash rate increasing to 3.6 per cent by March followed by a pause.
“We’re very committed to getting back down to target, but we have a flexible inflation target for a reason,” Ms Bullock said.
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