- The Reserve Bank of Australia raised the benchmark rate by a quarter-point to 3.1% on Tuesday.
- With six previous raises since May, the increase adds $672 to the monthly cost of a mortgage.
- Philip Lowe, RBA governor, said inflation was too high at 6.9%, over the aim of 2-3%.
Australia’s central bank boosted interest rates to a decade high to curb surging prices, straining mortgage borrowers.
The Reserve Bank of Australia (RBA) raised the benchmark rate by a quarter-point to 3.1% on Tuesday.
With six previous raises since May, the increase adds $672 to the monthly cost of a mortgage.
The move followed a smaller-than-expected quarter-point raise in October, which varied from the US Federal Reserve’s aggressive attitude.
Philip Lowe, RBA governor, said inflation was too high at 6.9%, over the aim of 2-3%.
Strong domestic demand relative to the economy’s ability to supply that need also plays a role, Lowe added.
Lowe expects inflation to reach 8% in the fourth quarter before dropping next year.
“The board expects to raise interest rates further, but it’s not on a pre-set course,” he said. It monitors the global economy, household consumption, and wage and price-setting.
He added that the central bank will do “everything is necessary” to return inflation to target.
The RBA emphasized the tight labor market, with unemployment at 3.4% in October — the lowest since 1974 — and many employers struggling to hire.
There are indicators rate hikes are slowing the economy.
Australia’s inflation slowed to 6.9% in October, while home prices fell for the seventh straight month in November, reducing household wealth and reducing consumer confidence and consumption.
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