SYDNEY,May 2 (Xinhua/APP): After keeping the interest rate on hold last month, the Reserve Bank of Australia (RBA) on Tuesday announced the decision to lift the cash rate target by 25 basis points to 3.85 percent, with the rate paid on Exchange Settlement balances also up by 25 basis points to 3.75 percent.
It marks the 11th increase handed down by the central bank in the space of a year. The newly-updated interest rate also hit its highest level since it was cut to 3.75 percent in May 2012.
After a board meeting, RBA Governor Philip Lowe said in a statement that inflation in Australia has passed its peak, but at 7 percent is still too high and it will be some time yet before it is back in the 2-3 percent target range.
“Given the importance of returning inflation to target within a reasonable timeframe, the Board judged that a further increase in interest rates was warranted today,” said Lowe.
According to the statement, while the recent data showed a “welcome decline” in inflation, the central forecast remains that it takes a couple of years before inflation returns to the top of the target range, with inflation expected to be 4.5 percent in 2023 and 3 percent in mid-2025.
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