Australia Lifts Interest Rate To 4.60%; Highest Since Late 2011
(RTTNews) - The Reserve Bank of Australia raised its benchmark rate by a quarter-point on Tuesday, taking it to a 15-year high level, as risks to inflation materialized amid geopolitical tensions.
The policy board, governed by Michele Bullock, unanimously decided to raise the cash rate target to 4.60 percent, the highest level since late 2011. The decision came in line with expectations.
The decision marked the third rate hike since the beginning of the year, further tightening financial conditions across the economy. Although the economy showed signs of slowing, inflation remained high.
"...inflation is still too high and the Board judged that, in light of recent developments, a further tightening in financial conditions is warranted to support a return of inflation to target in a reasonable period," the bank said in a statement.
The board said it will continue to do what is necessary to bring inflation sustainably back to target, including raising the interest rate further if needed.
Policymakers observed that some of the upside risks to inflation materialized. Moreover, there were further disruptions to global oil supply and growth and inflation in Australia were higher than expected.
Higher fuel prices have partially been passed through to prices of other goods and services. This inflation impulse is in addition to the effect of capacity pressures in the economy, they noted.
The board acknowledged that the unresolved Middle East conflict creates scenarios where inflation could remain elevated and economic activity could be weaker than currently forecast.
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