Canberra, Nov 7 The Reserve Bank of Australia (RBA) on Tuesday decided to raise the cash rate target by 25 basis points to 4.35 per cent, after keeping the rate on hold for four consecutive months.
Following a monetary policy meeting on Tuesday, RBA Governor Michele Bullock said in a statement that the rise in interest rates was warranted to be more assured that inflation would return to target in a reasonable timeframe, reports Xinhua news agency.
"Inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago. The latest reading on CPI inflation indicates that while goods price inflation has eased further, the prices of many services are continuing to rise briskly," said Bullock.
According to the latest figures released by the Australian Bureau of Statistics, the Consumer Price Index (CPI) rose 1.2 per cent in the September 2023 quarter, higher than the 0.8-percent rise in the June 2023 quarter, while the annual inflation eased down from 6.0 per cent to 5.4 per cent.
Automotive fuel and rents were flagged as the most significant contributors to the quarterly increase.
While the central forecast is for CPI inflation to continue to decline, Bullock noted that progress looks to be slower than earlier expected.
"CPI inflation is now expected to be around 3.5 per cent by the end of 2024 and at the top of the target range of 2 to 3 per cent by the end of 2025," said the Governor.
The latest announcement saw the benchmark interest rate soar from 0.1 per cent to its highest level in 12 years, which resulted from 13 rate hikes rolled out by the central bank from May last year.
Bullock didn't rule out further tightening of monetary policy.
"The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome," she added.
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