At its meeting today, the Board of the Reserve Bank of Australia have decided to increase the cash rate target by 50 basis points to 1.35 per cent. It also increased the interest rate on Exchange Settlement balances by 50 basis points to 1.25 per cent.

• Inflation is forecast to peak later this year and then decline back towards the 2–3 per cent range next year.
• The Australian economy remains resilient and the labour market is tighter than it has been for some time.
• Today’s increase in interest rates is a further step in the withdrawal of the extraordinary monetary support that was put in place to help insure the Australian economy against the worst possible effects of the pandemic.

The Board will also be paying close attention to the global outlook, which remains clouded by the war in Ukraine and its effect on the prices for energy and agricultural commodities. Real household incomes are under pressure in many economies and financial conditions are tightening, as central banks increase interest rates.

To view the full statement of Philip Lowe, Governor of the Reserve Bank, please click here.

Published : 05 Jul 2022