The decision aims to address persistently high inflation. This rate increase means an additional $1,264 in mortgage repayments for the average Australian mortgage since April 2022 when the cash rate was 0.10%.
RBA Governor Philip Lowe stated that the rate hike was necessary to contain inflation, which is currently at 7% but needs to be brought back within the target range of 2-3%. The combination of higher interest rates and cost-of-living pressures has led to a substantial slowdown in household spending.
The RBA remains determined to return inflation to target and will continue to monitor economic developments and trends. However, Treasurer Jim Chalmers acknowledged that the decision would be challenging for many Australians, especially mortgage holders. The rate hike will cost the average Aussie borrower over $70 more per month.
RBA stands for the Reserve Bank of Australia. It is the central bank of Australia and is responsible for conducting monetary policy, issuing currency, and maintaining financial stability in the country. The RBA's primary objective is to ensure price stability, which includes keeping inflation within a target range. It also plays a role in regulating the banking and financial system in Australia. The RBA sets the official cash rate, which influences interest rates in the economy and affects borrowing costs for individuals and businesses.
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