The Reserve Bank of Australia (RBA) has raised interest rates for the seventh consecutive month.
The RBA lifted the base interest rate by 25 basis points, lifting the cash rate from 2.6 per cent to 2.85 per cent.
RBA governor Philip Lowe said they had decided to lift the rate by 25 basis points because Australia’s inflation was forecast to hit 8 per cent by the end of the year.
“A further increase in inflation is expected over the months ahead, with inflation now forecast to peak at around eight per cent later this year,” Dr Lowe said.
“The bank’s central forecast is for CPI inflation to be around 4.75 per cent over 2023 and a little above 3 per cent over 2024.”
Dr Lowe said it was unlikely that yesterday’s move would be the last rate hike.
“The board has increased interest rates materially since May,” he said.
“This has been necessary to establish a more sustainable balance of demand and supply in the Australian economy to help return inflation to target.
“The board expects to increase interest rates further over the period ahead. It is closely monitoring the global economy, household spending and wage and price-setting behaviour.”
The rate rise was largely in line with expectations from economists, with Commonwealth Bank, NAB and ANZ experts all predicting the 25 basis points.
Those with a $500,000 mortgage are likely to pay an extra $76 per month after yesterday’s increase.