00:00The things that all the members agreed on were that inflation is too high, that there are still inflationary pressures
00:06from excess demand in the economy, and that inflation expectations, we need to make sure they're anchored.
00:13Where the difference was, was in the timing. The members that voted to hold were voting to hold in a
00:22hawkish sense.
00:26RBA Governor Michelle Bullock there in Australia's central bank has raised its key interest rate for a second straight meeting.
00:32This as the central bank steps up its battle against stubborn inflation. Let's bring in Bloomberg MLive strategist Mark Cranfield.
00:39Mark, the Aussie dollar just very slightly higher after today's RBA hike. I'm curious, though, why was it such a
00:46contentious decision? It was literally a five to four vote.
00:51Yeah, it looks as though people had different views on when exactly Australia should raise interest rates.
00:58No doubt they're all concerned about the inflation outlook, but clearly traders were a little bit caught off guard because
01:04going into the decision,
01:06the pricing in the market was that Australia will be raising interest rates not only today, but probably again in
01:13May or June and possibly even again in the fourth quarter of the year.
01:17People have had to dial back quite a bit on that. A split rate was not expected by investors today.
01:22And it sounds as though Michelle Bullock herself seemed reasonably confident going into the meeting that she would get the
01:28hike that she wanted.
01:29But she's met some opposition in terms of some people thought they should take more time to make that decision.
01:34So we had a pretty volatile day for the Australian dollar.
01:37It came back pretty well after selling off initially after the decision came out and surprising traders.
01:42But we've since, the Australian dollar then rallied again because, of course, RBA is still way ahead of most other
01:49G10 central banks.
01:50So the others are still on hold and maybe even thinking about hiking later in the year.
01:55But then since in the past hour or so, some tensions come out in the Middle East, pushed oil prices
02:01up.
02:01The Aussie dollars retreated again a bit today.
02:03It's a pretty lively day in the foreign exchange market.
02:05Overall, U.S. dollars a little bit stronger than it was first thing this morning.
02:10You know, it's fascinating because she straight up said, look, we may not be doing this or at least we
02:15wouldn't be so worried if it wasn't for the Iran war.
02:17And we know central banks all this week are going to be very reticent about saying that they're doing anything
02:22because of the war.
02:24Right. But she said, look, there's secondary inflation effects and not even telling you if we're front loading here, we
02:30might end up doing lots more.
02:31And this may not even be front loading.
02:33It was a fascinating forward guidance, really, from Michelle Bullock, wasn't it?
02:39Yeah, all those points you brought up are exactly what the other central banks this week will be discussing.
02:44Some of them will be more open about it than others.
02:47It's unlikely that anybody else is going to act as quickly as the central bank in Australia has done.
02:53But we probably get some guidance as to when to expect those changes coming through.
02:58Bank of Japan is the one a lot of people are watching because they're not expected to change interest rates
03:03this week.
03:03But there's quite a lot of expectation that in April when they meet that they will be able to justify.
03:08Inflation was running relative behind Japan.
03:11And some people have been telling them that they're behind the curve in terms of raising interest rates are only
03:160.75.
03:17So even if they raise again, that's just 1 percent, which is still way below most of their G10 peers.
03:22So certainly the Bank of Japan is the one that some traders here are expecting that we will have relatively
03:27hawkish wording from the governor,
03:30especially when he speaks to the press after the actual decision comes out later in the day.
03:34People are thinking that he might sound pretty hawkish during his press conference later on and prepare that rate hike
03:40for April.
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