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The Reserve Bank of Australia has chosen to once again lift the cash rate, this time by 25 basis points (bps) to 4.1 per cent for June.
It marks the nation’s highest cash rate since 2012 and the 12th rate hike in almost a year, as the country’s central bank continues its efforts to curb inflation.
The latest hike also represents a lift to the cash rate in 12 of the past 13 months – the only exception being a pause for April.
Although inflation in Australia appeared to have peaked at seven per cent late last year, the RBA said it’s far too high and well above the RBA’s target level of two to three per cent.
The RBA also mentioned in its statement the further increase in rates would provide it with greater confidence that inflation will return to the target level “within a reasonable time frame”.
City Index Senior Market Analyst Matt Simpson said the RBA’s decision to lift rates this month was less of a surprise than last month’s shock increase.
“If May’s decision to hike was ‘finely balanced’, then today’s hike should have been a no-brainer given their monthly inflation gauge ripped higher and around a quarter of Australia’s workforce is about to receive a bumper pay rise,” he said.
“And with inflation now back at 6.8 per cent year-on-year, we’re sure some ‘further tightening’ will indeed be required, as mentioned in today’s statement.”
In its statement today, the RBA also mentioned it would continue to monitor developments in the global economy, trends in household spending, and the outlook for inflation and the labour market.
The RBA closed its statement noting it was determined to return inflation to target and “will do what is necessary to achieve that”.
