The Reserve Bank has lifted interest rates amid more signs of the inflationary pressures hitting parts of the economy.
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.Consumer confidence has also continued to fall.
“The resilience of the economy and the higher inflation mean that this extraordinary support is no longer needed. “Strong demand, a tight labour market and capacity constraints in some sectors are contributing to the upward pressure on prices. The floods are also affecting some prices,” he said.Despite current inflation pressures, Lowe said the bank expected inflation to head back towards the RBA’s 2-3 per cent target band next year.
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