RBA surprises with 25 bps rate hike, cash rate raised to 4.10%

• Prior 3.85%
• Inflation has passed its peak but is still too high
• It will be some time yet before it is back in the target range
• Economic growth has slowed and labour market conditions have eased, although they remain very tight
• Wages growth has picked up in response to the tight labour market and high inflation
• RBA remains alert to the risk that expectations of ongoing high inflation contribute to larger increases in both prices and wages
• The path to achieving a soft landing remains a narrow one
• A significant source of uncertainty continues to be the outlook for household consumption
• Some further tightening of monetary policy may be required to ensure that inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term returns to target in a reasonable timeframe
• Full statement

That makes it back-to-back meetings now that the RBA has surprised markets or at least gone against the expected decision outcome. I outlined earlier how the risks are not really skewed to either side here. And the Australian dollar has benefited from this in a jump from around 0.6615 earlier to 0.6670 on the day. The 200-day moving average is the next key upside target to watch, sitting at 0.6690.

Looking at the details of the statement, the RBA continues to keep the focus on inflation pressures and made no change whatsoever to the final paragraph with regards to forward guidance.