Former Reserve Bank of Australia (RBA) board member Warwick McKibbin expresses his take on the central bank’s tightening plans for this year.
Key quotes
“The inflation numbers in Australia, although much lower than the rest of the world, are still towards the top end” of the RBA’s 2-3% target.”
“And the oil price shocks will obviously put upward pressure on that.”
“On top of the Covid-19 shocks and the worries of monetary tightening in major economies, we have now got an inflationary shock coming from higher oil prices out of Russia and an increase in geopolitical risks.”
“It may delay tightening of monetary policy, I’d think, particularly from the Fed.”
Market reaction
AUD/USD is rebounding in tandem with the risk tone, as it closes in on 0.7200, up 0.46% on the day.