The Bank of Australia has raised interest rates
2022.12.06 01:17
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The Bank of Australia has raised interest rates
Budrigannews.com – In an effort to maintain the economy on “an even keel,” the Reserve Bank of Australia (RBA) raised its benchmark rate on Tuesday as anticipated and indicated that subsequent rate increases will largely depend on the direction of inflation and economic growth.
In line with market expectations, the RBA raised its rate by 25 basis points to 3.10 percent. The gained 0.5 percent to 0.6733 against the dollar as a result of the move.
In an effort to combat rising inflation, the RBA raised interest rates on Tuesday, its final meeting of the year, by 300 basis points in 2022.
However, the bank now anticipates that inflation will rise even further in the near future and that economic expansion will likely slow., which is anticipated to end the year at around 8%, after growing at an annualized rate of 6.9% in November.
As it struggled to strike a balance between combating inflation and preventing economic destruction, the RBA had slowed the rate hike pace in recent months.
In a prepared statement, Governor Philip Lowe stated that the primary objective of the central bank is to “re-establish low inflation and return inflation to the range of 2-3% over time.” In addition, he stated that the RBA anticipates CPI inflation to slightly exceed 3% by 2024.
According to recent data, the Australian economy appears to have experienced a slowdown since the COVID pandemic. The country experienced an unanticipated drop in export values and slowed government spending in the September quarter, both of which are likely to have hurt the country’s gross domestic product.
In 2023 and 2024, the RBA anticipated annual growth of approximately 1.5%.
That is expected to decrease to a quarterly growth rate of 0.7 percent in the September quarter from 0.9 percent in the prior quarter, according to data that is due on Wednesday. However, a further decline could be signaled by the current account deficit.
Australia’s biggest trading partner, China, has been experiencing a slowdown in its economy as mainland demand for commodity exports has cooled.
Despite this, the country’s consumer spending has remained robust this year, largely due to the tight labor market. This is likely to continue supporting the economy in the near future because it has provided the central bank with sufficient leeway to continue raising rates.
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