Monetary policy: Central bank in Australia raises key interest rate for fourth consecutive month

Monetary policy: Central bank in Australia raises key interest rate for fourth consecutive month
Central Bank in Sydney

There is potential for further growth.

(Photo: Associated Press)

Cindy The Australian central bank has raised interest rates for the fourth consecutive month in the face of high inflation. At the end of its monetary policy meeting in August, the Reserve Bank of Australia (RBA) raised its interest rate from 1.35 to 1.85 percent. Till May it was still 0.1 per cent. Thus the central bank implemented the most drastic interest rate change since the early 1990s.

At the same time, he indicated that it was not the end of the road. “The board expects more steps to normalize monetary conditions in the coming months, but the path is not yet set,” said Federal Reserve Chairman Philip Lowe. So far, financial markets have been signaled to bring interest rates to a neutral level of at least 2.5 percent – theoretically, economic growth will neither be encouraged nor slowed.

Lowe’s has come under criticism for its rapid growth. A newspaper asked him to leave his post. Lowe himself acknowledged that the bank was walking a “narrow path” between controlling inflation and maintaining a “balanced economy”. Treasury Secretary Jim Chalmers defended the independence of the central bank. At the same time, however, he ordered a review to determine whether it needed modernization.

At the same time, the central bank lowered its forecasts for economic growth. According to this, Australian GDP will grow by only 3.25 per cent this year, from only 1.75 per cent instead of 2.0 in 2023, up from the previously expected 4.2 per cent.

tagus top-jobs

Find the best job now
Be notified by email.

Inflation is expected to reach a high of 7.75 per cent. It should be brought back within the target range of 2 to 3 per cent only in 2024. Higher interest rates make loans more expensive to invest and thus can put a strain on the economy. Also inflation can be controlled.

More: Bank of England is facing big interest rate hike

Subscribe

Get the best of Newspaper delivered to your inbox daily

Most Viewed

Related Stories