While global central banks take on jumbo hikes, Australia took a smaller step

The Reserve Bank of Australia surprised markets in October with a smaller-than- expected rate hike, even as it promised to keep inflation in check.

According to the minutes from the Oct. 4 meeting, two options were considered before the bank decided to raise the cash rate by 25 basis points.

The hike was the sixth in a row to tame global inflation.

The world's central banks are trying to tackle global inflation. The European Central bank raised interest rates the same month as the U.S. Federal Reserve did.

The minutes said that theRBA considered two options, one of which was to raise the cash rate by 25 basis points.

According to the minutes, the argument for continuing with an increase of 50 basis points was based on the inflationary environment and risks to inflation expectations.

The board members of the central bank acknowledged the benefits of a smaller increase.

Drawing out policy adjustments would also help to keep public attention focused for a longer period on the Board’s resolve to return inflation to targetReserve Bank of Australia

The case to slow down its hikes was made by its board members in order to assess the effects of the increases in interest rates to date.

The cash rate had been increased substantially in a short period of time and the full effect of that increase was to be expected.

The gloomy outlook for global markets was one of the many factors taken into account by the deputy governor.

She spoke at the Australian Finance Industry Association.

The Board felt that a smaller increase in October was justified due to developments in consumption, wages and the international economy.

The board of the central bank has more meetings than other central banks in the region, which gives it more flexibility in the timing of rate increases. She said that theRBA was able to get similar effects with small rate increases.

If interest rates are increased at every meeting, we can move much faster than overseas central banks. She said that we could achieve a similar rise in interest rates.

The Australian dollar strengthened against the U.S. dollar after the increase.

The fight against inflation is a concern for the central bank.

According to the minutes, drawing out policy adjustments would help to keep public attention focused on the Board's resolve to return inflation to target.

The Reserve Bank of Australia has an inflation target. August's annual inflation was 6.8%, up from 2% before the Pandemic.

The central bank could lose more if it doesn't keep inflation in check.

It said that if the Board were to reduce the size of the rate increase, it would be the first of its kind. If the credibility of the path to reduce inflation came into question, it would be difficult to reestablish low inflation.

Future interest rate increases will be determined by the outlook for inflation and the labor market, according to the Reserve Bank of Australia.

The deputy governor of the Reserve Bank of Australia stated that inflation is too high in Australia. The Board is determined to return inflation to target.