Australia’s central bank to raise interest rate

The Reserve Bank of Australia (RBA) is expected to raise interest rates by 0.5 percent today.

Raising the rate to 2.35%, this is the fifth consecutive month of rate hikes—Australia’s highest since 2014. The move is part of an effort to fight rising global inflation. If the rates are raised, mortgage payments could rise by over $400 and leave borrowers with an interest rate of over five percent on their repayments. While the rate hikes so far are intended to curb borrowing and spending to drive prices back down, observers have noted that sectors of the economy have defied the rate hikes thus far: Unemployment is down to 3.4 percent,retail sales increased in July 2022 and household deposits are at a record high.

Expect that the RBA will go through with the 0.5 percent rate hike, the fourth of that magnitude in five months, in keeping with global trends and pressure from outside forces like the U.S. Federal Reserve. Expect also that the rates will continue to increase but will return instead to the traditional 0.25 percent increases in the coming months as the economy recovers and prices stabilize.