Australia’s Reserve Bank has increased the official interest rate once again
The Reserve Bank of Australia (RBA) has increased the official cash rate to an 11½-year high of 4.10%. This is the 12th rate hike since May last year, with the exception of April 2023 when rates were held steady.
The decision was made in a bid to tackle rising inflation, which has been steadily increasing over the past few months. The RBA noted that this increase is necessary to keep inflation within their target range of 2-3%.
The cash rate is the interest rate on unsecured overnight loans between banks and serves as a risk-free benchmark rate for the Australian dollar. It was previously set at 3.85%, and this increase will likely have an effect on mortgage costs and other borrowing costs across Australia.
Analysts had expected that rates would remain unchanged at 3.85%, so today’s announcement came as a surprise to many. The RBA noted that this increase does not necessarily mean that further hikes are imminent, but it could be a sign that more increases may be necessary in order to keep inflation within their target range.
This news comes after a period of respite from rising borrowing costs for Australians, who have seen their mortgage costs spiral since May last year when the first rate hike occurred. With this latest increase, it looks like Australians can expect further tightening in the coming months as the RBA works to keep inflation under control.
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