Moody's: The Australian central bank's interest rate hike may be aimed at maintaining flexibility to support the economy.

Sunny Nguyen, an analyst from Moody's, stated that the Reserve Bank of Australia raised interest rates for the second consecutive time, aiming to curb current inflation and maintain the ability to support the country's economy in the future. This Australian economic manager mentioned in a report that the decision on Tuesday gave the Reserve Bank of Australia committee some flexibility to raise interest rates again in May if inflation data allow, or to keep rates unchanged without appearing complacent. Nguyen said, "A central bank with a policy rate at the level of 4.1% has a lot of room to cut interest rates. Another central bank with a policy rate at 3.85%, with real interest rates close to zero, has almost no room to cut interest rates." Although the market had already anticipated a rate hike in May, the divergent decision on Tuesday indicated that the possibility of a rate hike was far from certain. Nguyen added that rate hikes and soaring fuel costs could lead to the Reserve Bank of Australia's tightening policy being effective faster than the committee's expectations.