RBA Deputy Governor Hauser says current rate-cutting cycle is likely over

Deputy Governor Andrew Hauser said the RBA is taking a one- to two-year view on inflation and that Australians have probably seen the final rate cut of the current easing cycle; the bank has held its benchmark rate at 3.60% since August.

The Reserve Bank of Australia has kept its cash rate at 3.60% since its last cut in August, and Deputy Governor Andrew Hauser said policymakers are taking a one- to two-year view on inflation rather than reacting to each data release. He described inflation above 3% as "too high" and said Australians have probably seen the final rate cut of the current easing cycle. Hauser said the RBA will wait for the comprehensive quarterly inflation report due Jan. 28 to frame its view on consumer prices. Recent official data showed inflation slowed in November but both headline and underlying measures remained above the RBA's 2-3% target band. Key details: - The RBA's benchmark rate has been 3.60% since the August cut. - Hauser said the central bank is taking a one- to two-year view on inflation and that inflation above 3% is "too high." - He said Australians have probably seen the final rate cut of the current easing cycle and that officials will wait for the quarterly inflation report on Jan. 28 to assess consumer prices. - November inflation slowed but both headline and underlying measures were reported as remaining above the 2-3% target band. - Markets reacted to the interview: traders pared bets on a May rate hike to about 80%, and three-year government bond yields fell as policy-sensitive bonds rallied. - RBA meeting minutes noted policymakers discussed conditions that could require rate increases and that the full impact of 75 basis points of easing earlier in the year was "yet to be seen." Summary: Hauser's remarks underline a cautious approach by the RBA and were accompanied by a modest market re-pricing towards later policy moves. The bank has signalled it will await the Jan. 28 quarterly inflation report before framing its next policy view; further decisions will depend on incoming data.