The Reserve Bank of Australia (RBA) has made a surprise move by lifting interest rates by another 0.25 percent on May 2.
The latest round of increases takes the official cash rate to 3.85 percent, the highest level since April 2012.
Prior to the announcement, the general market expectation was a pause for May, which was in line with the RBA’s decision to halt the interest rate hiking cycle in April.
The central bank cited high inflation as the main reason for its unexpected decision, despite a drop in the annual consumer price index from 7.8 percent to seven percent in the March quarter.
“Inflation in Australia has passed its peak, but seven percent is still too high, and it will be some time yet before it is back in the target range,” RBA governor Philip Lowe said in a statement….