Weekly Update: 06.05.22: cash rate target 0.35%

“Headline inflation is now expected to peak at around 6 per cent in the second half of this year, partly driven by higher petrol prices and sharp increases in the cost of new dwellings.”

RBA, May 2022 Monetary Statement

Economic Update

• The RBA raised the cash rate target to 0.35% in its May Monetary Policy Decision. Following the decision, Governor Lowe gave a speech and conducted a Q&A session. Internationally, the US Federal Reserve raised its benchmark cash rate by 0.5 per cent, and the Bank of England raised its cash rate by 0.25 per cent.  The RBA released its latest Statement on Monetary Policy.  The RBA also released its latest Chart Pack for May 2022 (data to 28 April 2022).

The ABS released:

• Building approvals which showed that dwellings approved fell 18.5% in seasonally adjusted terms in March, following a 42% rise in February.
• Lending indicators which showed the value of new loan commitments for housing rose 1.6% in March.
• International Trade which showed that imports fell 5% driven by decreases in imports of processed industrial supplies and consumption goods.
• Retail Trade which showed that the seasonally adjusted rate rose 9.4% compared with March 2021, and rose 1.6% month-on-month.
• Living Cost Indexes which showed that all five LCIs rose, ranging from 3.8% for employee households to 4.9% for age pensioner households (the highest increase since 2006).
• Participation, Job Search and Mobility, (this data enables detailed analysis of labour market participation, and includes barriers to participation).
• International Investment Position which showed that Australian investment abroad rose $275b to $3,327b.

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Cash rateWeekly Update