Australian Central Bank Raises Key Interest Rate by 0.25%P... 10 Consecutive Increases

RBA Raises Interest Rate to 3.60%
Highest Base Rate in 11 Years
Tightening Expected to Ease Due to Slowing Inflation

The Reserve Bank of Australia (RBA) raised the benchmark interest rate by 0.25 percentage points to 3.60%. Australia's benchmark interest rate has increased by 3.5 percentage points over 10 times since May last year, reaching the highest level in 11 years.

On the 7th (local time), the RBA announced after its monetary policy meeting that it would raise the benchmark interest rate from the previous 3.35% to 3.6%. This figure aligns with market expectations. Since raising the benchmark interest rate from 0.1% to 0.35% in May last year, Australia has consecutively increased the benchmark interest rate 10 times up to the March monetary policy meeting.

Philip Lowe, Governor of the Reserve Bank of Australia
Photo by AP Yonhap News>

Philip Lowe, Governor of the RBA, stated in a post-meeting statement, "Additional tightening of monetary policy is necessary for inflation to return to the target," adding, "We will decide how much further to raise rates considering global economic trends, household spending, and inflation."

However, he also said, "Looking at the indicators, inflation appears to have peaked," and "Considering the weakening of the global economy and Australian demand, the rise in commodity prices is expected to ease over the coming months."

In fact, Australia's wage growth rate in the fourth quarter fell short of the RBA's expectations, and the unemployment rate rose, reducing factors that pressure price increases. Additionally, the gross domestic product (GDP) from September to December last year increased by only 0.5% compared to the previous quarter, falling short of the market expectation of 0.9%, indicating a weakening economic growth trend.

Accordingly, experts predict that the RBA is likely to shift its monetary policy to a tightening stance after the next rate hike. Sean Langcake, Head of Macroeconomic Forecasting at BIS Oxford Economics, a specialist Australian economic analysis firm, said, "Today's RBA announcement turned more dovish compared to the statements made at last month's monetary policy meeting," adding, "Considering this cycle, there is a possibility that there will be only one more rate hike going forward."

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