The RBA yesrday raised rates 25 basis points. Clearly they are worried about going too quickly and too far in raising rates. My guess is they will raise another 25 points on Melbourne cup day and then take a rest and see what happens. The guess continues that the RBA will probably have to tighten again near the end of summer.
Monetary policy involves guesswork because of the lags involved. I get the feeling people do not need to reduce spending yet. It is because of this I would not be surprised if the RBA has to go a little too far in raising rates and then when the pips squeak have to reduce them even the the end of next year.
We shall see.
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