Reserve Bank of Australia, 'Big Step' for 3 Consecutive Months... Benchmark Interest Rate at 1.85%

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The Reserve Bank of Australia (RBA) raised its benchmark interest rate by 0.5% on the 2nd, marking the third consecutive month of a 'big step' (a 0.50 percentage point increase in the benchmark interest rate at once).

According to Bloomberg News and others, the RBA announced at its monetary policy meeting that it decided to raise the benchmark interest rate by 0.5 percentage points from 1.35% to 1.85%. After raising the benchmark interest rate from 0.1% to 0.35% in May for the first time in 11 years and 6 months, the RBA has increased it by 0.5 percentage points each month for three consecutive months from June to August.

Initially, the market expected the RBA to implement a 'giant step' (a 0.75 percentage point increase in the benchmark interest rate at once) to curb inflation. However, the consumer price inflation rate for June, announced on the 27th of last month, fell short of expert forecasts, and the real estate market downturn due to rising loan interest rates also influenced the decision, resulting in a big step.

Philip Lowe, Governor of the RBA, said, "We expect to take additional measures in the process of normalizing monetary policy over the coming months, but we are not on a predetermined path," adding, "(The timing and scale of additional measures) will be determined based on incoming data."

The RBA forecast that Australia's inflation rate will reach 7.75% this year, then slightly fall below 4% next year, and record about 3% in 2024. It projected economic growth to be 3.25% this year and to slow down to 1.75% next year. Considering that the previous forecast expected growth rates of 4.2% this year and 2.0% next year, this is a downward revision.

Governor Lowe stated, "Our priority is to bring the inflation rate back to the 2-3% range," adding, "The path to achieving this balance is narrow and clouded with uncertainty."

In the financial market, Lowe's remarks and the RBA's forecasts were interpreted as indicating a possible slowdown in the pace of interest rate hikes, leading to a simultaneous decline in Australian government bond yields and the currency value.

This content was produced with the assistance of AI translation services.