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Australia’s central bank has lifted its benchmark interest rate for the first time in more than 11 years
Australia’s central bank has lifted its benchmark interest rate for the first time in more than 11 years
Australia’s central bank on May 3 lifted its benchmark interest rate for the first time in more than 11 years. The cash rate rose from 0.1% to 0.35%.
A rise was widely expected after official data released last week showed that Australia’s inflation rose to 5.1% in the year through March. It is the highest annual rate since 2001 when a newly introduced 10% federal consumption tax created a temporary spike.
Inflation in the latest March quarter was sharply higher than the 3.5% three months earlier. The March result was driven by a surge in fuel and housing costs as well as food shortages created by recent Australian floods.
The Reserve Bank of Australia adjusts interest rates to keep inflation within a 2-3% target band.
The cash rate has been at a record low of 0.1% since November 2020.
The bank last increased interest rates in November 2010. The cash rate then rose a quarter of a percentage point to 4.75%.
It is the first time that the bank, whose independence of government was enshrined in legislation in 1996, has shifted interest rates during a federal election campaign since 2007.
Two weeks after the benchmark rate rose by 0.25 of a percentage point to 6.75% in November 2007, Prime Minister John Howard’s conservative government was voted out of office after more than 11 years in power.
Prime Minister Scott Morrison’s conservative government is seeking a rare fourth three-year term at elections on May 21.
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