Australia’s interest rate rise signals growing hawkish stance in Asia

For an indication of how much the energy crisis is shaping the path of monetary policy, look no further than Australia. On May 5, the country’s central bank raised interest rates for the third consecutive time, unwinding last year’s monetary easing.The Australia" class="entity-link entity-organization" data-entity-id="3046" data-entity-type="organization">Reserve Bank of Australia (RBA) said “higher fuel prices are adding to inflation and there are indications that this is likely to have second-round effects on prices for goods and services more broadly”.The RBA’s decision to keep tightening policy in response to the energy shock – the conventional wisdom is that central banks should look past adverse supply shocks given that interest rates have little direct impact on supply – has reinforced the perception that it is an outlier among the world’s leading central banks.