Central Banks
RBA Surprises Market With Quarter-Point Hike, Currency Tumbles
- Lowe highlights RBA has raised ‘substantially’ in short period
- Three-year bond yield posts biggest intraday drop in 14 years
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Australia staked out an outlier position among major central banks, becoming the first to break with outsized interest-rate increases as it delivered a quarter percentage-point move.
Bond yields and the currency tumbled as the Reserve Bank raised the cash rate to 2.6% -- a result predicted by only a quarter of 28 economists surveyed. Governor Philip Lowe reinforced his commitment to tightening even as he acted on signals last month of a slower pace of increase.