The Reserve Bank of Australia, the country’s central bank, has increased the cash rate by a massive 50 basis points, from 0.35 percent to 0.85 percent, with “further steps” to come.
Governor Philip Lowe said the hike came in response to higher-than-expected inflation to “assist with the return” of inflation to the two to three percent target range over time.
“Inflation in Australia has increased significantly. While inflation is lower than in most other advanced economies, it is higher than earlier expected,” he said in the monetary policy decision.
The inflation rate is also expected to increase further with supply chain disruptions caused by COVID-19 and the war in Ukraine accounting for much of the increase….