Australia's First Interest Rate Hike Due to Inflation Pressure

Critical Interest Rate Hike from the Reserve Bank of Australia

The Reserve Bank of Australia raised its policy interest rate by 25 basis points to 3.85 percent due to rising inflation. This was the first interest rate hike since November 2023.

Decision Aligned with Economic Data

In the official statement, the Reserve Bank of Australia (RBA) indicated that the decision was in line with economists' expectations. Inflation has reached its highest levels in the last six quarters.

Emphasis on Inflation in Statements

The RBA noted that private demand has increased faster than expected and that the pressures on capacity are stronger, while also highlighting that the labor market is under tight conditions. It was emphasized that inflation pressures significantly increased in the second half of last year.

Attention to Interest Rate Cut Expectations

RBA officials have frequently expressed their expectations for an interest rate cut, with RBA Deputy Governor Andrew Hauser emphasizing that inflation is likely to remain persistently high earlier this year. In this context, they stated that the likelihood of a rate cut in the near term is “probably very low.” The central bank aims to reach its inflation target of 2.5 percent.