The year 2022 was characterized by a period of profound change in monetary policy stance by most of the central banks around the world. The Reserve Bank of Australia was no exception to this.
The RBA Cash Rate target on Jan 2022 was 0.10% and this target Cash Rate ended the year on 3.1%. The Total hike in cash rate target for 2022 was 300 basis points i.e. 3%
Here is a look at how the cash rate target changed throughout the RBA board meeting dates in 2022.
| Effective Date | Change% points | Cash rate target% | Related Documents |
|---|---|---|---|
| 7 Dec 2022 | +0.25 | 3.10 | Statement Minutes |
| 2 Nov 2022 | +0.25 | 2.85 | Statement Minutes |
| 5 Oct 2022 | +0.25 | 2.60 | Statement Minutes |
| 7 Sep 2022 | +0.50 | 2.35 | Statement Minutes |
| 3 Aug 2022 | +0.50 | 1.85 | Statement Minutes |
| 6 Jul 2022 | +0.50 | 1.35 | Statement Minutes |
| 8 Jun 2022 | +0.50 | 0.85 | Statement Minutes |
| 4 May 2022 | +0.25 | 0.35 | Statement Minutes |
| 6 Apr 2022 | 0.00 | 0.10 | Statement Minutes |
| 2 Mar 2022 | 0.00 | 0.10 | Statement Minutes |
| 2 Feb 2022 | 0.00 | 0.10 | Statement Minutes |
Source: RBA
The cause of all these hikes being the word INFLATION a monetary phenomenon as claimed by Milton Friedman, which the younger generation of the twenty first century were quite unaware of. The Australian inflation rate measured by CPI had risen by 7.3% in the latest reading of September 2022. Australia uses CPI (Consumer Price Index) as the measure of inflation and this as of 2022 is published on quarterly basis by the Australian Bureau of Statistics. The last time inflation was this high was around late 1980s. The Reserve Bank of Australia’s objective is to maintain price stability in the Australian Economy and has a mandate of keeping inflation rate between 2-3% on average over the medium term. To maintain this goal, the Reserve Bank uses cash rate to influence the financial conditions in the Australian economy. The cash rate serves as a benchmark rate of interest which determines other interest rates in the Australian economy. This is similar to the federal funds rate which is determined by the US Federal Reserve Board to influence the US economy.
Source: Australian Bureau of Statistics and Reserve Bank of Australia
