Australia raises key rate to 10-year high as inflation runs hot
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The Reserve Bank of Australia lifted the cash rate to 3.35 per cent, the highest level since September 2012.
PHOTO: BLOOMBERG
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SYDNEY – Australia’s central bank raised interest rates by a quarter-percentage point and reiterated its resolve to cool the hottest inflation in three decades.
At its first meeting of the year, the Reserve Bank of Australia (RBA) lifted the cash rate to 3.35 per cent, the highest level since September 2012, in a widely-anticipated decision.
It was the ninth consecutive hike since policymakers embarked on their tightening cycle in May.
“The Board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary,” RBA governor Philip Lowe said in his post-meeting statement.
The Aussie dollar strengthened to 69.45 US cents, while three-year bond yields climbed 8.5 basis points to 3.23 per cent after the decision.
Australia has lagged international counterparts in its policy response to higher prices, having raised rates by 3.25 percentage points, compared with 4 in New Zealand and 4.5 in the United States.
The RBA’s slower pace reflects Mr Lowe’s efforts to bring the economy in for a soft landing.
The Federal Reserve is expected to keep pushing higher following a strong employment report. BLOOMBERG
