The Reserve Bank of Australia has today lifted interest rates by 25 basis points from 3.35 per cent to 3.60 per cent in a bid to tackle inflation.
It’s the tenth rise since May 2022 and follows the RBA board’s monthly meeting held earlier today.
Governor Philip Lowe said in a statement the Board expects “further tightening of monetary policy will be needed to ensure that inflation returns to target and that this period of high inflation is only temporary”.
Mr Lowe added: “Global inflation remains very high. In headline terms it is moderating, although services price inflation remains elevated in many economies.
“It will be some time before inflation is back to target rates. The outlook for the global economy remains subdued, with below average growth expected this year and next.
“The monthly CPI indicator suggests that inflation has peaked in Australia. The central forecast is for inflation to decline this year and next, to be around 3 per cent in mid-2025.
“Medium-term inflation expectations remain well anchored, and it is important that this remains the case.”
Figures show the Australian economy has slowed with GDP increasing by 0.5 per cent in the December quarter and 2.7 per cent over the year.
“Growth over the next couple of years is expected to be below trend,” the RBA Governor said.
“The Board’s priority is to return inflation to target. High inflation makes life difficult for people and damages the functioning of the economy.
“And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment.
“The Board is seeking to return inflation to the 2–3 per cent target range while keeping the economy on an even keel, but the path to achieving a soft landing remains a narrow one.”
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