Australia reserve bank to hold meeting on interest rates

The Reserve Bank of Australia will hold a board meeting today, after which it is expected to announce a further

Reserve Bank Australia

Photo: David Gray/Bloomberg

The Reserve Bank of Australia will hold a board meeting today, after which it is expected to announce a further increase in interest rates by 50 basis points to curb inflation.

According to data released by the Australian Bureau of Statistics last Wednesday, prices rose by 6.1% in the last quarter year-on-year—the highest in over 20 years. Costs of transportation, housing and food are particularly affected.

The likely hike in Australian interest rates follows the trend of most central banks, as inflation continues to rise globally. The IMF predicts global inflation to further increase to 8.3% in 2022. Current estimates by the Australian government predict national inflation to increase to 7.75% by the end of the year, before gradually subsiding again next year. Meanwhile, real wages will likely fall further, further exacerbating the squeeze on many Australians’ pockets.

Efforts by the newly-elected Prime Minister Anthony Albanese to strengthen Australia’s economy have been further hampered by the current COVID-19 outbreak, the country’s largest yet. The Australian government is considering more drastic measures to combat inflation, including curbing gas exports. However, despite the current global economic downturn, the Australian economy is still expected to grow by around 3% this year.