The Central Bank of Australia (RBA) decided to raise the benchmark interest rate by 0.25 percentage point, from 0.10% to 0.35%, at its monetary policy meeting on Tuesday (3). ).
The increase was the first made since November 2010 and comes in an attempt to control inflation in the country, which has reached the highest level in 20 years. Also according to the RBA, further additions are likely in the coming months.
“The Board is committed to doing whatever is necessary to ensure that inflation in Australia returns to target over time. This will require a further increase in interest rates in the period ahead,” RBA President Philip Lowe said in a statement.
In the first quarter of this year, Australian consumer prices rose at a rate of 5.1% per year, with core inflation up 3.7%. The RBA’s projection is that inflation will remain above the target until at least mid-2024. The institution expects inflation to reach 6.0% by the end of this year, with a rise of 4.75% in the core.
In a statement, the RBA also said it expects the unemployment rate to drop to around 3.5% in early 2023, the lowest level in nearly five decades. The rate has dropped to around 4.0% in recent months.
“Given the progress towards full employment and the evidence on prices and wages, withdrawing some of the extraordinary monetary support provided during the pandemic is appropriate,” Lowe said. By the end of the year, the market expects the RBA to increase the basic interest rate to around 2.5%.
Source: CNN Brasil
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