As predicted by most economists, the Reserve Bank has decided to once again raise the official cash rate target by a further 50 basis points this month, taking it to 1.35%.
The last time it was around that mark was in June 2019, when it was slashed from 1.5 to 1.25%, in the first change for almost three years.
Announcing the decision on Tuesday, RBA Governor Philip Lowe said that while inflation remains a concern, the Australian economy is ‘resilient’ and job vacancies and ads are both at very high levels, with both unemployment and underemployment expected to improve over the months ahead.
“Today’s increase in interest rates is a further step in the withdrawal of the extraordinary monetary support that was put in place to help insure the Australian economy against the worst possible effects of the pandemic”, Lowe said.
“The resilience of the economy and the higher inflation mean that this extraordinary support is no longer needed.”
Lowe concluded by saying that the Board expects to take further steps in the process of ‘normalising monetary conditions’ in Australia over the months ahead, which means we can expect more interest rate rises to come.
