By Oliver Gray
Investing.com - The Reserve Bank of Australia lifted the nation's official cash rate by 25 basis points from 0.1% to 0.35%, marking the first interest rate increase in more than 11 years as policymakers move to curb surging inflation pressures.
In a statement, RBA Governor Philip Lowe noted that “The economy has proven to be resilient and inflation has picked up more quickly, and to a higher level, than was expected. There is also evidence that wages growth is picking up. Given this, and the very low level of interest rates, it is appropriate to start the process of normalising monetary conditions.”
Policymakers also noted the positive outlook for economic growth in Australia amid continuing uncertainties such as Chinese COVID-19 disruptions, the war in Ukraine and declining consumer purchasing power from higher inflation. Officials forecasted Australian GDP to grow by 4.25% over 2022 and 2% over 2023.
Meantime, markets are pricing in another rise in June, taking the cash rate target to at least 0.5%.