Australia’s central bank continues to suggest rate hikes to combat inflation

The Reserve Bank of Australia (RBA) has released the minutes of its August meeting, which show that the RBA committee has signaled that it will raise interest rates again in the future. The rate hike will depend on the economic data received and the inflation outlook.

“The RBA committee anticipates more action will be taken to normalize monetary policy in the coming months. The RBA believes that this will enable the economy to continue to expand. It’s a narrow and uncertain road,” the RBA said in its minutes of the meeting.

The minutes also indicate that the RBA expects domestic demand to continue to pick up in the coming period. This, it says, is due to the very low unemployment rate and increased savings during the COVID-19 pandemic.

For the meeting held on August 2, then. The RBA’s Monetary Policy Committee voted to raise the policy rate by 0.50% to 1.85%, the highest level in six years. This is the highest level in six years and the fourth hike in a row.

The RBA governor told the meeting that the rate hike was an ongoing process to normalize monetary policy. He also said that raising interest rates was the RBA’s top priority to bring inflation to a 2-3% range.

Factors such as the sluggish global economy, the war in Ukraine, and the floods on Australia’s east coast all contributed to the sharp rise in demand-side inflation.

The Australian Bureau of Statistics (ABS) reports that inflation in Australia is now 6.1% year-on-year, the highest level since December 1990.

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