Recently, the Reserve Bank of Australia (RBA) decided to raise interest rates from 4.1% to 4.35% – the first increase in 5 months and the highest level since December 2011.
Australia’s move has delivered a strong blow to the retail sector just before Christmas. This decision goes against the trend of interest rates set by the Federal Reserve and other Western central banks. The markets are preparing for a pause in interest rate hikes, with forecasts suggesting these organizations are likely to cut interest rates next year, even though inflation is not meeting the 2% target.
Currently, Australia’s Consumer Price Index (CPI) remains at 5.4%.
However, Australia’s action could make the country a pioneer in a new wave of interest rate hikes, potentially altering global monetary policies. Such policy changes have deep and wide-reaching effects on the entire market, especially for Bitcoin and other risk-bearing assets, which had created expectations that the Federal Reserve would not raise interest rates further in the current cycle.
With this unexpected development, the value of assets may fluctuate and readjust. However, future market dynamics still depend on whether other central banks will follow RBA’s decision or maintain the current status, thereby strengthening the global economic chessboard.