Decision exceeds predictions from economists amid pressure on households and businesses from rising inflation
The treasurer, Jim Chalmers, earlier on Tuesday warned “it’s going to be a difficult winter for a lot of people with what we’re seeing now with prices and wages combining at the same time”.
The Albanese government inherited an economy with a jobless rate at its lowest since the mid-70s but also with an underlying inflation rate that is running at its highest quarterly pace since 2002. Despite the imported source of much of the inflation, the RBA sees the need to rein-in excessive demand to ensure expectations of further prices don’t lead to a spiral of costs.
Australia’s problems are shared in many similar economies. Canada’s central bank, for instance, last week lifted its cash rate by 50bp for second month in a row.
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