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The Australian Central Bank raised interest rates by 0.25% to 3.6%, the highest in 11 years.

The Reserve Bank of Australia (RBA) announced its decision to increase its policy rate by 0.25 percentage points to 3.6%, marking the highest level in 11 years. This move is the 10th consecutive rate hike by the central bank, which aims to counter the rising inflation in the country.

The RBA’s efforts to tighten monetary policy are expected to have a slowing effect on the economy. In the fourth quarter, the gross domestic product (GDP) grew only 0.5%, as per the data released by the Australian Bureau of Statistics (ABS) on March 1. This is in contrast to the 0.7% growth recorded in the third quarter and is below the expected rate of 0.8% predicted by analysts.

The lower-than-expected GDP growth in the final quarter of 2022 is attributed to the impact of the central bank’s interest rate hikes and high inflation. The RBA’s move to raise rates is expected to dampen consumer and business spending, leading to a slowdown in the economy. The ABS data also indicates that the Australian economy is likely to face further deceleration in the coming days.

The RBA’s decision to raise interest rates comes as inflation remains a concern in Australia. The central bank aims to rein in rising prices, particularly in the housing market, by increasing borrowing costs. The latest rate hike is expected to have a cascading effect on home loan interest rates, making mortgages more expensive for borrowers.

The RBA has signaled that it will continue to raise interest rates until inflation is brought under control. This move is expected to have a significant impact on the Australian economy, and analysts predict that the country’s growth trajectory may be slower in the near future.

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