The Reserve Bank of Australia has hiked rates for the eighth time this year at its final board meeting for 2022 – announcing a 25 basis point increase to take the official cash rate to 3.10 per cent.
Announcing the latest rise, RBA governor Philip Lowe said that high inflation figures were still weighing on the board’s mind and that inflation figures were still far too high for the bank to consider pausing increases. “Inflation in Australia is too high, at 6.9 per cent over the year to October,” Mr Lowe said.
“Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role. Returning inflation to target requires a more sustainable balance between demand and supply.”
Mr Lowe acknowledged that rate hikes in 2022 had been substantial, but said they were necessary in order to tame inflation and keep the economy in check.
“There has been a substantial cumulative increase in interest rates since May. This has been necessary to ensure that the current period of high inflation is only temporary. High inflation damages our economy and makes life more difficult for people,” he said.
Mr Lowe expected the RBA would have to enact further rate rises in 2023 but said this would depend on the economic outlook both here and abroad.
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