Australia Hikes Key Rate By 25 Bps

(RTTNews) - The Reserve Bank of Australia lifted its benchmark rate by a quarter-point as some of the upside risks to inflation materialized.

The policy board, governed by Michele Bullock, unanimously decided to raise the cash rate target to 4.60 percent. The decision came in line with expectations.

"... inflation is still too high and the Board judged that, in light of recent developments, a further tightening in financial conditions is warranted to support a return of inflation to target in a reasonable period," the bank said in a statement. The board said it will continue to do what is necessary to bring inflation sustainably back to target, including raising the interest rate further if needed.

Policymakers observed that some of the upside risks to inflation materialized. Moreover, there were further disruptions to global oil supply and growth and inflation in Australia were higher than expected.

Higher fuel prices have partially been passed through to prices of other goods and services. This inflation impulse is in addition to the effect of capacity pressures in the economy, they noted.