The Reserve Bank has elected to again raise interest rates to 4.1 per cent at its meeting on Tuesday.
Governor Philip Lowe said in his statement on the decision that inflation in Australia had passed its peak but at seven per cent was"still too high"."This further increase in interest rates is to provide greater confidence that inflation will return to target within a reasonable timeframe."June’s rise marks the second consecutive hike after the bank held rates steady in April in a worrying development for households feeling the pain form worsening economic conditions.
Despite many economists being split on the chances of a hike, markets had already largely priced in the increase as traders brace for the potential of even more rises in the coming months. Higher than expected inflation figures released last week and the increase to the minimum wage announced by the Fair Work Commission were likely front and center in the mind of Governor Philip Lowe as he attempts manufacture a soft-landing for Australia’s economy.
At his appearance before Senate Estimates last Wednesday, the Governor defended previous rate hikes and suggested more could be on the horizon with inflation still well above the RBA’s target band and not falling quickly enough.
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