Risk of High Inflation Prompts RBA Rate Hike

The Reserve Bank of Australia (RBA) raised interest rates in early November, citing persistent inflation and the unexpectedly strong performance of the economy as primary drivers behind the decision. The minutes from the November meeting, released on Tuesday, reveal deep concerns among the board members that keeping rates unchanged could result in inflation remaining above the desirable target.

Interest Rates Reach Highest Level Since 2011

By implementing a 25 basis-point increase on 7 November, the interest rate reached 4.35%, a peak not observed since late 2011. This marks the 13th time the interest rate has been lifted in the current cycle. The minutes also indicated that the RBA's inflation predictions hinge on one or two additional rate rises, and the bank wishes to avoid a "larger monetary policy response" in the future by acting now. These moves are in line with RBA's strategy to steer inflation back to its 2%-3% target range by the end of 2025.

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Submitted by The Guardian on