Bank australia | Rate Increase by Australian Central Bank for Third Month in a Row

Bank australia | Rate Increase by Australian Central Bank for Third Month in a Row

For the third time in three months, Australia’s central bank increased its benchmark interest rate, raising the cash rate from 0.85% to 1.35%.

Australia’s Canberra (AP) — On Tuesday, Australia’s central bank increased its key interest rate for the third time in three months, raising the cash rate from 0.85% to 1.35%.

The Reserve Bank of Australia increased by half a percentage point, matching its hike from June.

It had been more than 11 years since the bank increased the rate for the first time during its monthly board meeting in May.

Increases in the board meetings in June and July were widely anticipated. Governor of the Reserve Bank Philip Lowe stated in May that anticipating a rise in the cash rate to 2.5% was “not unreasonable.”

Inflation in Australia is high, though not as bad as it is in many other nations, according to Lowe on Tuesday.

Domestic and international causes are both contributing to Australia’s rising inflation, according to Lowe, who made the assertion.

He said that recent floods were also having an impact on some pricing. “Strong demand, a tight labor market, and capacity limits in some sectors are contributing to the rising pressure on prices,” he said.

In the “months to come,” the board anticipated taking additional action, he said.

Incoming data and the board’s evaluation of the outlook for inflation and the labor market will be used to determine the magnitude and timing of future interest rate hikes, Lowe continued.

To keep inflation within its target range of 2% to 3%, the Reserve Bank modifies interest rates. The March quarter saw an increase in the annual rate of inflation to 5.1%, according to the most recent official figures. Since 2001, when a newly implemented 10% federal consumption tax produced a brief increase, that was the highest yearly rate.

March quarter inflation was considerably higher than the annual 3.5% rate published three months earlier. The increase was caused by rising housing and fuel prices as well as crop damage from last year’s floods.

Since Saturday, flooding in Sydney and the surrounding area has further harmed local harvests and raised the price of several fruits and vegetables.

On July 27, inflation data for the June quarter will be announced, increasing the likelihood that the bank’s board would vote to increase rates less than a week later in August.

As of late this year, Lowe predicted that inflation would reach a peak of 7%.

Neither the Reserve Bank nor the Treasury Department, according to Treasurer Jim Chalmers, have predicted that higher interest rates will cause a recession in the Australian economy.

Our economy is expanding, but so are our challenges, according to the way I see things, Chalmers remarked. The most recent rate increase, according to him, is “extremely terrible news for hardworking Australians who are already struggling,”

The housing market in Australia has already reacted to the prior rate increases.

According to the CoreLogic Home Value Index for June, the two most populous cities in Australia, Sydney, and Melbourne, saw quarterly declines in housing prices of 2.8% and 1.8%, respectively.

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