August 2, 2022
In order to deal with inflation, the Reserve Bank of Australia increased its benchmark interest rate for a fourth consecutive month, raising the cash rate by 50 basis points.
Following its monthly board meeting on Tuesday, the RBA agreed to increase the cash rate to 1.85 percent. With the four rate increases, the increase is at 1.75 percentage points, which is the highest level since 1994. The majority of economists predicted a 50 basis-point increase.
However, the bank’s governor, Philip Lowe, predicted that Australia’s economy will expand less quickly this year and in the years to come than the RBA had predicted in its May monetary policy statement. Investors sent the Australian dollar down versus the US dollar and caused shares to recover some of their day’s losses as a result of the forecast revisions and modifications to his remarks regarding upcoming rate increases.
The Reserve Bank of Australia has fallen behind the majority of its international counterparts in raising borrowing costs to lessen the force behind the accelerating price increases. Since the implementation of the goods and services tax at the turn of the century, consumer prices increased in the June quarter at the quickest annual rate.
Source: The Guardian
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