Early this May, the U.S. Federal Reserve increased the target policy rate by half a percentage point. This is the largest increase in over 22 years. In a recent interview, Fed Governor Chris Waller supported a further and continuous tightening of monetary policy “by another 50 basis points for several meetings” until inflation comes down to the 2 percent target.

The Australian economy is doing well both in terms of GDP as well as unemployment (3.9 per cent). In Australia, the CPI inflation is lower than in the U.S.A. but still above the 2-3 per cent target. Year-ended C.P.I. trimmed inflation is at 3.7 per cent. Given this, I believe it would be appropriate to further increase the policy cash rate in the June meeting.