The Reserve Bank of Australia on Tuesday hiked interest rates by another 25 bps to 3.85% after a pause last month. The decision shocked investors as the central bank claimed further tightening is needed to control inflation as it has passed the peak, but 7% is still too high.
Meanwhile, the European Central Bank (ECB) also expects to raise interest rates as inflation reaches 7% in the Euro Area. While the ECB was set to deliver a 25 bps rate increase in May, the bank may increase the rate by another 50 bps to control inflation and bring it to the 2% target.
Australia Looks for More Rate Hike to Control Inflation
The Board of the Reserve Bank of Australia on May 2 meeting decided to raise interest rates by 25 bps to 3.85%. The central bank also raised the rate paid on Exchange Settlement balances by 25 bps to 3.75%.
The hawkish stance caused the Australian dollar to rise while bond futures tumbled traders expect more pressure after Governor Philip Lowe revealed further tightening to bei
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