Central Banks
Australia Unexpectedly Raises Key Rate, May Tighten Further
- Bank concerned it may not meet inflation target at lower rate
- RBA alert to risk higher inflation expectations may spur wages
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Australia’s central bank unexpectedly raised its key interest rate and kept the door open to further hikes, fretting that policy needs to be tighter in order to be confident that inflation will return to target in mid-2025.
The Reserve Bank raised its cash rate by a quarter-percentage point to 4.1%, the highest level since April 2012, bringing its cumulative tightening to 4 percentage points since May last year. Only 10 of 30 economists predicted the rate rise while money markets saw about a one-in-three chance of a hike.