The Latest: The Reserve Bank of Australia has increased its cash rate target by 25 basis points, bringing it to 0.35%.

The official Cash Rate has held steady at 0.10% since November 2020. However inflation data released last week led to revised predictions as to which way the RBA will go at its monetary policy meeting today.

AMP Capital chief economist Shane Oliver now expects the RBA to start hiking today by 40 basis points, which will take the cash rate to 0.50%.

Commonwealth Bank economists have held their prediction for a cash rate increase, saying today's RBA decision will most likely be to keep the Cash Rate at 0.10%. 

"While Commonwealth Bank (CBA) Group economists acknowledge that the RBA could increase rates, we believe that it is more likely to wait for confirmation that wages have started to lift towards the goal rate of 3%," CBA economists said.

"The other complication being the timing of the federal election on May 21.

"So we expect the RBA to lift the official cash rate at the Board meeting on June 7, following a shift to an explicit policy tightening bias at the May 3 meeting."

Also read: How a cash rate rise impacts home owners and borrowers

Image by Javier Allegue Barros via Unsplash

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