The Reserve Bank in Australia has lifted its official cash rate another 25 basis points to 4.5%, as expected, but surprised the market with hawkish comments.
It says that interest rates are back to average for most borrowers, which is interpreted to mean that there will be a pause in OCR hikes.
This is the sixth rate hike in the space of just eight months. The RBA has unwound one third of the emergency 425 basis point easing of policy from late 2008.
"It seems RBA officials have wanted to remove the extreme level of policy accommodation as quickly as is reasonably possible, while avoiding creating an impression of alarm about the Bank possibly having been "behind the curve". They have succeeded, but only just," JP Morgan says.
