Quicknote: RBA maintains a sensible approach, a class act
The RBA is now set on a clear path of 25 bpts increases to fix the inflation problem but it now longer feels rushed or hurried. There is a sense of balance in this statement that will probably lead other central banks to take note.
We think it's a class act.
The statement points to the fact that inflation is too high, but inflation is a medium term problem which requires patience. The RBA has also brought into the equation the fact that financial stability cannot be disregarded and any attempts to tame inflation carry with them dangers.
We think this tone will eventually be adopted by the ECB, Bank of England, Bank of Canada and eventually the US Federal Reserve.
Bottom line: There will be more rate hikes next year, but they will be measured and steady. There is no panic because it's a delicate juggling act. The RBA has also increased its 2023 inflation expectations higher to 4.75% which is still above the 2-3% target range.
But this statement is the first sign that rate rises at all costs will not be the course taken. Australia continues to lead the developed world in prudent monetary policy management.