The 0.25 of a percentage point rise in interest rates might seem timid, but the RBA seems to finally be transforming itself from a forecasting agency to a central bank that can articulate what is happening and what is likely to happen.
Don’t mistake Tuesday’s 25 basis point increase in official interest rates for lack of resolve from the Reserve Bank. If anything, the opposite is true.
Financial markets were pricing in a four-in-five chance of a 50 basis point increase, and plenty of RBA watchers expected that outcome, too.
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Richard Holden is professor of economics at UNSW Business School and president of the Academy of the Social Sciences in Australia. Connect with Richard on Twitter.
