Global stocks remained stagnant on Tuesday morning following an unexpected interest rate hike by Australia’s central bank. This shows that central banks across the world continue their fight to suppress inflation after months of tight monetary policy.
The Reserve Bank of Australia implemented a 25 basis point interest rate hike, explaining that inflation remains too high and therefore requires further monetary tightening.
“The RBA’s hike today is likely to ramp up the market’s hawkish expectations for the Fed this week as RBA is one of the G-10’s least hawkish central banks and has shown the inflation fight is not over,” David Forrester, strategist at Credit Agricole CIB in Singapore observed.
European stocks remained relatively static on Tuesday, with the Stoxx Europe 600 Index little changed. In the United States, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all seeing little movement.
The dollar weakened in the face of the Australian central bank’s announcement, with the Bloomberg Dollar Index slipping by 0.2%. The euro gained 0.3% to $1.1005, while the British pound advanced 0.1% to $1.2509.