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 85 basis points. It also increased the interest rate on Exchange Settlement balances by 50 basis points to 75 basis points.
- Inflation in Australia has increased significantly. While inflation is lower than in most other advanced economies, it is higher than earlier expected.
- Global disruptions, the war in Ukraine, local capacity constraints, tight labour markets, and the floods earlier in 2022 have all contributed to price rises.
- The Australian economy is resilient, growing by 0.8 per cent in the March quarter and 3.3 per cent over the year.
- Employment has grown significantly and the unemployment rate is 3.9 per cent, which is the lowest rate in almost 50 years.
The Board commented that 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 the Australian economy during the pandemic. The resilience of the economy and the higher inflation mean that this extraordinary support is no longer needed. .
To view the full statement of Philip Lowe, Governor of the Reserve Bank, please click here.
Published : 07 Jun 2022