Breaking: Reserve Bank lifts interest rates to 10-year high | rachelclun swrighteconomy
The Reserve Bank has delivered a pre-Christmas rate rise, taking the official cash rate to its highest level in 10 years and capping off the year’s aggressive tightening cycle.
The Reserve Bank started lifting the cash rate from its historic low of 0.1 per cent in May after inflation began to surge. Inflation is currently at 7.3 per cent, and the bank expects it to peak around 8 per cent by the end of the year before falling through 2023. “Household spending is expected to slow over the period ahead, although the timing and extent of this slowdown is uncertain. Another source of uncertainty is the outlook for the global economy, which has deteriorated,” he said.
Lowe reiterated the bank’s recent position that the RBA was not on a pre-set course with future interest rate movements. But consumer spending is now starting to slow as the effect of 3 percentage points of rate hikes takes hold.KPMG senior economist Sarah Hunter said the monthly Australian Bureau of Statistics data on household spending showed momentum was easing.
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