Reserve Bank governor Philip Lowe.Credit:James Brickwood
The increase in the cash rate – now at its highest level in 11 years – comes a year after the central bank started raising it from the historic low of 0.1 per cent in a bid to tackle inflation.
Reserve Bank governor Philip Lowe said inflation,at 7 per cent,was still too high and would take some time to come back down to the bank’s target range of 2-3 per cent.
“The board’s priority remains to return inflation to target. High inflation makes life difficult for people and damages the functioning of the economy,” he said.
“Given the importance of returning inflation to target within a reasonable timeframe,the board judged that a further increase in interest rates was warranted today.”
The move will add almost $100 a month to the repayments on a $600,000 mortgage. The cumulative increase on repayments since the bank started lifting rates would then be more than $1300 a month.
“This is a really difficult decision for a lot of Australians who are already under the pump,” Treasurer Jim Chalmers said.