The Reserve Bank of Australia raised its benchmark interest rate to 3.1% in an attempt to reduce high inflation.
Australia’s central bank raised interest rates to a decade-high, putting mortgage holders under greater pressure as they seek to bring down soaring home prices.
The Reserve Bank of Australia (RBA) on Tuesday raised its prime rate – which determines how much fees commercial banks pay for loans – by a quarter of a percentage point to 3.1%.
Along with six previous increases since May, this spike adds more than A$1,000 ($672) to the monthly cost of an average mortgage.
The move after a lower than the expected quarterly percentage point increase in October different from the positive stance of partners such as the US Federal Reserve.
RBA Governor Philip Lowe said inflation remained too high at 6.9%, well above the 2-3% target.
“Global factors largely explain this high inflation, but strong domestic demand relative to the economy’s ability to meet it also plays a role,” Lowe said. in a statement.
Lowe said he expected inflation to pick up to 8% in the final quarter before easing next year.
“The board is expected to raise rates further in the near-term, but it is not on the set path,” he said. “It is closely monitoring the global economy, household spending, wages and pricing behavior.”
He added that the central bank remained “resolute in its determination to bring inflation back to target” and would do “what is necessary to get there”.
The RBA noted that the labor market remains tight, with the unemployment rate at 3.4% in October – the lowest level since 1974 – and that many companies are struggling to hire workers.
However, there are signs that the rate hike has cooled the economy.
Australia’s inflation eased to 6.9% in October, while house prices fell for a seventh straight month in November, a drag on household wealth that could limit confidence and consumption. consumers in the coming months.