According to a report by Jinshi Data, George Tharenou, the chief economist at UBS Australia, analyzed the interest rate hike situation of the Reserve Bank of Australia.
In the past, when the Reserve Bank of Australia raised interest rates, it was based on the overall CPI situation. As soon as the overall CPI began to rise, it would increase interest rates. This is akin to saying that when there is an upward trend in the overall price level, the central bank would raise interest rates to control it and prevent prices from rising too sharply.
However, in the recent interest rate hike cycle, the situation has changed a bit. The Reserve Bank of Australia no longer looks at the overall CPI but instead observes the core inflation adjusted average. When this core inflation adjusted average reaches about 3.0% year-on-year, it starts to raise interest rates. This indicates that the Reserve Bank of Australia has adjusted the indicators for judging interest rate hikes, possibly believing that core inflation better reflects the true state of the economy and more accurately represents the pressure of rising prices.
Now this economist says that according to the pattern of how the Reserve Bank of Australia has historically reacted to inflation results, the current trigger point for raising interest rates has already been reached. In other words, based on past situations, the Reserve Bank of Australia is very likely to raise interest rates next.
If the Reserve Bank of Australia raises interest rates, it will tighten the monetary environment to curb inflation, leading to market concerns about economic prospects, which will decrease investors' risk appetite, reduce allocations to highly volatile assets like cryptocurrencies, and shift towards safe-haven assets, bringing short-term pressure to the cryptocurrency market; at the same time, it will raise the risk-free yield in traditional markets, reduce the attractiveness of cryptocurrencies, lead to a capital return to traditional markets, putting pressure on cryptocurrency prices, especially small and medium-cap projects; it may also trigger market expectations for other central banks to follow suit in tightening policies, causing the cryptocurrency market to face broader liquidity contraction pressures, with mainstream currencies being significantly affected.