By ROD McGUIRK, Associated Press
CANBERRA, Australia (AP) — Australia’s central bank boosted its benchmark rate of interest on Tuesday for a seventh consecutive month to a nine-year high of two.85%.
The Reserve Bank of Australia’s selected a second consecutive quarter-percentage-point rise within the money rate at its latest monthly board meeting following 4 consecutive half-percentage-point hikes.
When the bank lifted the speed by 1 / 4 percentage point in May, it was Australia’s first rate hike in greater than 11 years. The money rate is now at its highest point since May 2013, when the bank cut the speed from 3% to 2.75%.
Reserve Bank Gov. Philip Lowe said in a press release “inflation in Australia is just too high,” and his board “expects to extend rates of interest further over the period ahead.”
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The bank “stays resolute in its determination to return inflation” to a goal band of two% to three% by raising the fee of cash, Lowe said.
Inflation rose from an annual rate of 6.1% within the June quarter to 7.3% within the September quarter.
The Treasury Department forecast last week that inflation would peak at 7.75% before the tip of the yr. However the bank expected a peak of “around 8%.”
Treasurer Jim Chalmers said the speed hike reaffirmed his government’s decision to restrain spending in its economic plan for the present fiscal yr which he released last week within the annual budget.
“As today’s decision has shown, inflation is the No. 1 challenge in our economy. It’s the No. 1 focus of the federal government. It’s the No. 1 focus with regards to the budget that we handed down last week,” Chalmers told reporters.
Lowe said Australia’s economy was “continuing to grow solidly.”
Treasury documents released last week forecast the economy would grow 3.25% in the present fiscal yr that began on July 1 before plummeting to 1.5% in 2023-24 as rising rates of interest hit consumer spending. Growth is then forecast to creep as much as 2.25% in 2024-25 and to 2.5% the next yr.
Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, the nation’s largest business group, warned the bank against pushing the economy into recession.
“Now we have to watch out. I believe we are able to’t have a situation where it’s tightened too rapidly,” McKellar told Australian Broadcasting Corp.
“In the event that they squeeze the life out of the economy, then really the damage goes to be quite significant and we don’t wish to find yourself with that end result,” he added.
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