Westpac: RBA maintains interest rates and inflation risks remain

Westpac states that despite the risk of hawk inflation, the Australian Reserve Bank (RBA) maintains a cash interest rate of 4.35 per cent, which appears to have been set. According to Westpac, the reference to "if upside risk arises" in RBA's statement suggests that the Board has actually reduced the bias of the increase. Westpac ' s basic expectation is that the RBA will maintain this level of interest rate by mid-year, although there are still possibilities for further interest rate hikes, depending largely on the development of energy prices and the situation in the Middle East. Westpac also noted that recent inflation and labour market data were lower than the RBA forecast in May, suggesting that current policy setting might be too tight。