The Reserve Bank of Australia has raised interest rates! The first major central bank to reverse course this year has arrived.
A gunshot sound, coming from the Southern Hemisphere!🇦🇺
Today, the Reserve Bank of Australia announced an interest rate hike, becoming the first major developed country central bank to raise rates in 2026.
Why the sudden rate hike? The statement makes it very clear: inflation is back with a vengeance! Especially in the service industry and housing costs, which have surged, and the labor market is tight, leading to "private demand growing much stronger than expected." In other words, the economy is a bit overheated, and prices are hard to control.
$XAG $XAU $PAXG
They even directly raised their forecasts for inflation, growth, and employment this year, with core inflation expected to struggle to return to the ideal range by the end of 2027. The stance is quite clear: inflation is more concerning than growth, better to act first and discuss later.
What signal does this send to the market?
1️⃣ The expectation of a global interest rate cut may need to be reassessed, especially if other central banks also see inflation rising repeatedly.
2️⃣ The Australian dollar may strengthen in the short term, but pressure on stock and bond markets will increase.
3️⃣ For assets sensitive to global liquidity like cryptocurrencies, the lack of synchronization in major central banks' monetary policies may exacerbate volatility. One central bank raises rates, will others follow? The market will have to guess.
In short, the monetary policy kickoff in 2026 has taken an unexpected turn, reminding us: inflation is not a linear decline.
Central banks can pause, but the battle may not be over.
Who do you think will be the next to follow up with a rate hike?
Will the Federal Reserve dare to lower rates with confidence this year?🤔
