Breaking: Interest rates pushed up as Reserve Bank targets high inflation | swrighteconomy rachelclun
The Reserve Bank has increased official interest rates for the third time in three months as it attempts to bring inflation under control.
The RBA started lifting interest rates in a bid to combat inflation, which is currently at 5.1 per cent. RBA governor Philip Lowe has previously said the bank expects it to reach 7 per cent by the year’s end. Employment, new orders and housing activity all dropped in the month. HIA senior economist Nicholas Ward noted there was still a strong pipeline of activity for the sector but cost pressures were growing.“Materials and labour shortages continued to weigh on home building in June. These constraints have resulted in increases in the cost of construction and extended build times,” he said.
“Today’s increase in interest rates is a further step in the withdrawal of the extraordinary monetary support that was put in place to help insure the Australian economy against the worst possible effects of the pandemic,” he said. Lowe said inflation in Australia was high, noting that while there were global factors at play there were also domestic issues putting upward pressure on prices.
“As global supply-side problems continue to ease and commodity prices stabilise, even if at a high level, inflation is expected to moderate,” he said.
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