Australia Central bank says worst over for inflation as policy enters 'calibration stage'

Central bank holds policy rate in 5.25%-5.50% range. Officials see 75 basis points of cuts next year. Fed's 'soft landing' scenario still on the table.

As expected, the central bank’s monetary policy committee (MPC) kept the benchmark repo rate unchanged at 6.5% and retained the policy stance at withdrawal of accommodation

All 42 economists in a Bloomberg survey forecast the Reserve Bank of Indias six-member monetary policy committee will keep the repurchase rate unchanged at 6.50% on Thursday. Policymakers are keeping an eye on the likely occurrence of El Nino, which brings drier weather conditions and can affect crop yields.

Australia’s central bank is set to extend a pause in interest-rate increases on Tuesday following a deceleration in inflation that allows the board more time to assess the economic impact of its policy tightening to date.

According to the latest projections provided by the RBI's Monetary Policy Committee, consumer price index inflation is seen at 4% in July-September and 4.7% in October-December of the next financial year. The central bank has repeatedly emphasized that it needs to see a durable return to 4% inflation before it can consider any change in its current tight policy.

Australia's central bank Governor Philip Lowe said on Wednesday it remains to be determined whether there is more work to be done on monetary policy but it is possible that further tightening would be required to bring inflation to heel.

As 2024 approaches, central banks in major developed economies are expected to shift away from aggressive rate hikes that dominated 2023. The Bank of Japan remains an outlier with no imminent shift from its negative rates policy. A favorable turn in inflation trends, moving closer to the 2% target, is allowing central banks to ease policy, with interest rate cuts anticipated in 2024.

India's central bank kept its key lending rate steady for a second straight policy meeting on Thursday, as widely expected, but signalled that monetary conditions will remain tight for some time as it looks to further curb inflationary pressures.

RBI Governor Shaktikanta Das, who is into the last year of his second three-year term at the helm of the central bank, has been steadfast in highlighting the need to get the inflation down to 4 per cent on a durable basis.

With a July policy meeting done and dusted, the head of Australia's central bank is waiting to hear if he will remain at the helm or take an early exit as past policy missteps come back to haunt him.