Another Interest Rate Hike as the Inflation Battle Continues!
The Reserve Bank of Australia (RBA), at its June board meeting on Tuesday, increased the official cash rate for the 12th time in its tightening cycle, bringing the cash rate to 4.10% - its highest level since April 2012.
In a statement, RBA governor Philip Lowe said that while inflation in Australia is past its peak, at 7 per cent it is still too high and it will be some time yet before it is back within the target range.
"This further increase in interest rates is to provide greater confidence that inflation will return to target within a reasonable timeframe."
"The Board remains alert to the risk that expectations of ongoing high inflation contribute to larger increases in both prices and wages, especially given the limited spare capacity in the economy and the still very low rate of unemployment. Accordingly, it will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms," he said.
Mr Lowe added that some "further tightening" of monetary policy may be needed to ensure inflation returns to target within a reasonable timeframe, but that it will depend on how the economy and inflation evolve.