Australia’s central bank has slugged borrowers with another increase in interest rates, extending the record run of hikes to nine meetings in a row as it tries to cut inflation, and indicating there are “further increases” to come.
The Reserve Bank at its first board meeting of 2023 on Tuesday raised its cash rate 25 basis points to 3.35%, its highest level in just over a decade. Most economists had predicted such an increase.
“Global inflation remains very high” RBA governor Philip Lowe said in the accompanying statement.
“It is, however, moderating in response to lower energy prices, the resolution of supply-chain problems and the tightening of monetary policy,” Lowe said. “It will be some time, though, before inflation is back to target rates” of 2%-3% over time.
In a signal that the RBA sees the cash rate rising by at least another half percentage point, Lowe said “the Board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary”.
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