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Economics - RBA Raises Inflation Forecast As Traders Raise Rate Expectations - Report Example

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This paper 'Economics - RBA Raises Inflation Forecast As Traders Raise Rate Expectations" focuses on the fact that Monetary policy of any country plays a key role with regard to bringing about economic reforms. The key objectives, the policymakers, is to ensure that the economy runs successfully. …
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Economics - RBA Raises Inflation Forecast As Traders Raise Rate Expectations
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Download file to see previous pages For the purpose of maintaining and achieving such stability, however, it uses various tools and strategies which are discussed in the article as well as explained elaborately in the subsequent sections of this paper.

This article titled “RBA raises inflation forecast as traders raise rate expectations” written by Michael Boutros, appeared in The Bull, on May 09, 2011 (the bull, 2011). The author is a technical/fundamental currency analyst specializing in the FX markets and works for DailyFX (fxstreet, 2011). The article discusses the current Australian interest rates stating the RBAs (Reserve Bank of Australia) recent declaration regarding the rise in the inflation forecast above the 2-3 per cent target through the year 2013. The Reserve Bank of Australia held rates at 4.75% for a fifth straight meeting. It states that considering the current rates, which are above the expected target, the central bank has very little opportunity to tolerate any further advances in its prices. The author predicts that in response to such rising inflation, the RBA might lift its cash rate in the coming months, as the investments in mining and energy sectors rise, which are likely to further accelerate the pace of inflation.

The article deals with the variation in interest rates and the rising inflation and discusses the ways and means to control the same. In this regard, the author has suggested tightening the monetary policy, which can be discussed in accordance with the contractionary monetary policy preceded by a brief overview of the monetary policy i.e. both the concept as well as the monetary policy of Australia. The other concepts discussed in this article include Cash Rate and inflation targeting.
According to Bernanke et al., (1999: 4) inflation targeting is a framework for monetary policy characterized by the public announcement of official quantitative targets (or target ranges) for the inflation rate over one or more time horizons, and by an explicit acknowledgement that low, stable inflation is monetary policy's primary long-run goal" (in Hüfner, 2004: 7)  ...Download file to see next pagesRead More
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