You could lose some or all your initial investment do not invest money that you cannot afford to lose. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. Leverage creates additional risk and loss exposure. We consider our forecasts forīoth headline and underlying inflation to be consistent with the RBA increasing the cash rate by 25bp at the November Board meeting.įoreign exchange trading carries a high level of risk that may not be suitable for all investors. This means that monetary policy will be tightened again at the November Board meeting. Indeed the upcoming Q3 22 CPI, due to print on 26 October, is expected to show that inflation pressures remained red hot over the September quarter. But in the near term the annual rate of inflation will push higher. We expect inflation pressures to abate relatively swiftly in 2023.The Board settled on 25bp because of the risks to global and domestic growth and the potential for inflation to subside quickly. But the RBA became the first major central bank to reduce the size of rate rises in October when the Board increased the cash rate by 25bp, in line with our call (note that this move was a surprise to the market as ~44bp was priced ahead of the meeting). The RBA is currently an inflation fighting central bank having delivered an incredible 250bp of tightening in just five months since May 2022.But monetary policy operates with a lag and inflation takes time to respond to changes in interest rates. Most major central banks have tightened monetary policy swiftly in an effort to put downward pressure on aggregate demand and in turn inflation. High inflation is the main issue for central banks globally.
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