Australia raises rates to curb stubborn inflation

Australia’s central bank raised the country’s key interest rate to a near 12-year high on Tuesday to tame stubbornly high inflation.

The Reserve Bank of Australia tightened the cash rate by a quarter of a percentage point to 4.35 percent, its highest level since December 2011.

It was the first hike in five months and also the first under the stewardship of Michele Bullock, who took over as central bank governor in September.

She had been widely expected to act after the latest data showed annual inflation running at a hotter-than-expected 5.4 percent in the three months to September 30.

“Inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago,” Bullock said in a statement.

“Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks,” she said.

The bank has said returning inflation to 2-3 percent by late 2025 is a “priority”.

The move was the latest of a string of increases that began in May 2022 as the Covid-19 pandemic and war in Ukraine fanned inflation and forced the bank to push up the key interest rate from its previous rock-bottom 0.1 percent. (BSS/AFP)