RBA lifts interest rate to 3.35%

Following the Reserve Bank of Australia’s February board meeting on Tuesday afternoon, RBA Governor Philip Lowe confirmed a 25-basis point increase, lifting the official interest rate to 3.35 per cent, the highest level since 2012. Making today the ninth consecutive rate rise since May 2022.

The driving factor that contributed to the cash rate being increased in Australia is Inflation. Global Inflation continues to remain high with it hitting 7.8 per cent. It will be some time before we see inflation go back to target.

Inflation in Australia is expected to continue to rise throughout the start of the year and then begin to decline, as cost-of-living pressures ease and higher interest rates slow demand in the economy.

As a result of higher inflation and the increase in interest rates, pressure is being placed on household budgets, which will be felt in mortgage payments.

The unemployment rate has remained steady at around 3 1/2 per cent over recent months and is the lowest rate since 1974. Both job vacancies and job ads remain at high levels but have recently declined a little.

The board will be paying close attention to all contributing factors and how they balance out. In doing so they will be able to determine the right setting of monetary policy to help return inflation to target.

The RBA is committed to doing what is necessary to ensure that inflation in Australia returns to target over time. This will require a further increase in interest rates over the period ahead to help bring inflation, household spending and the global economy back to target.