The Reserve Bank of Australia has today lifted interest rates by 25 basis points from 2.6 per cent to 2.85 per cent in a bid to ease red-hot inflation.
It’s the seventh rise in as many months and follows the RBA board’s monthly meeting today.
It comes as Corelogic data shows national property prices have fallen for the sixth month in a row as higher interest rates make the cost of borrowing more expensive.
RBA Governor Philip Lowe said in a statement: "As is the case in most countries, inflation in Australia is too high. Over the year to September, the CPI inflation rate was 7.3 per cent, the highest it has been in more than three decades.
Peak to come
"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.
"A further increase in inflation is expected over the months ahead, with inflation now forecast to peak at around 8 per cent later this year.
"Inflation is then expected to decline next year due to the ongoing resolution of global supply-side problems, recent declines in some commodity prices and slower growth in demand. Medium-term inflation expectations remain well anchored, and it is important that this remains the case.
"The Bank’s central forecast is for CPI inflation to be around 4¾ per cent over 2023 and a little above 3 per cent over 2024.
"The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.
"The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that."
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