The Reserve Bank of Australia raised its cash rate by a quarter of a percentage point to 4.85% on Tuesday, its fifth increase this year and the highest level since 2008.
The board split six to three, with three members favouring holding rates steady.
“Inflation is too high, and our forecast suggests it will stay higher for longer. Some pain now will prevent even worse pain down the track,” Governor Michele Bullock said, according to the Guardian.
The bank expects inflation to climb to about 4.5% by the end of 2026 and not return to its 2-3% target band until late 2027. It forecast economic growth of 1.6% this year and 1.3% in 2027.
Treasurer Jim Chalmers said higher fuel prices due to the Middle East conflict were the “primary driver” of inflation. Opposition leader Angus Taylor blamed “Labor’s spending spree.” Comparison site Canstar estimated the rise adds A$107 a month to repayments on a A$700,000 home loan.
Sources: The Guardian, RNZ
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