Another hit for householders ... RBA lifts interest rates

Published 2:30pm 5 July 2022

The Reserve Bank of Australia has announced it will lift interest rates by 50 basis points from 0.85 per cent to 1.35 per cent.

It is the third rise in three months and follows the RBA board’s monthly meeting today.

RBA Governor Philip Lowe said in a statement:

"Global inflation is high. It is being boosted by COVID-related disruptions to supply chains, the war in Ukraine and strong demand which is putting pressure on productive capacity. Monetary policy globally is responding to this higher inflation, although it will be some time yet before inflation returns to target in most countries.

Inflation in Australia is also high, but not as high as it is in many other countries. Global factors account for much of the increase in inflation in Australia, but domestic factors are also playing a role. Strong demand, a tight labour market and capacity constraints in some sectors are contributing to the upward pressure on prices. The floods are also affecting some prices.

Inflation is forecast to peak later this year and then decline back towards the 2–3 per cent range next year."

The Board expects to take further steps in the process of normalising monetary conditions in Australia during the months ahead.

"The size and timing of future interest rate increases will be guided by the incoming data and the Board's assessment of the outlook for inflation and the labour market," the statement said.

Australia’s inflation rate jumped to 5.1 per cent in the March quarter - its highest level in 21 years - and is expected to hit 7 per cent by December.