Australia’s central bank raises key interest rate to 3.1%

Dec 5, 2022, 9:52 PM | Updated: 10:41 pm

A postal worker walks past the Reserve Bank of Australia in Sydney, Tuesday, Dec. 6, 2022. Australi...

A postal worker walks past the Reserve Bank of Australia in Sydney, Tuesday, Dec. 6, 2022. Australia's central bank has raised its benchmark interest rate by a quarter-point to 3.1% as it continues to battle inflation. (AP Photo/Rick Rycroft)

(AP Photo/Rick Rycroft)

WELLINGTON, New Zealand (AP) — Australia’s central bank has raised its benchmark interest rate by a quarter-point to 3.1% as it continues trying to wrestle down inflation.

The increase was the bank’s eighth in a row and took the rate to its highest level in 10 years.

Still, Australia’s rate hikes have remained relatively modest and its key rate remains lower than in many other countries including the United States, where the Federal Reserve has raised its key interest rate to a range of 3.75% to 4%.

Reserve Bank of Australia Governor Philip Lowe said inflation remained too high at 6.9%. That’s well above the bank’s target inflation rate of between 2% and 3%.

“Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role,” Lowe said in a statement.

He said inflation is expected to keep rising to 8% in the current quarter before falling next year.

“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that,” Lowe said.

He said the bank is forecasting the nation’s economic growth to moderate to about 1.5% next year and in 2024.

The bank noted the labor market remains tight, with unemployment at 3.4% in October — the lowest rate since 1974 — and many firms struggling to hire workers.

Lowe said the bank’s board expected to keep raising rates but it was not a pre-set course, and the size and timing of rate hikes depends on incoming data.

The rate increase was widely expected by economists and Australia’s dollar was little changed on the announcement, trading at around 67 U.S. cents. The benchmark S&P/ASX 200 fell 0.5%.

Australia’s economy has advantages but also is subject to forces beyond its control, such as the war in Ukraine, Treasurer Jim Chalmers told reporters.

“These interest rate rises are already having harsh and heavy consequences on a lot of household budgets and on a lot of mortgage repayments,” Chalmers said.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Republican presidential candidates, former New Jersey Gov. Chris Christie, left, talking with forme...

Associated Press

The GOP debate field was asked about Trump. But most of the stage’s attacks focused on Nikki Haley

The four Republican presidential candidates debating Wednesday night mostly targeted each other instead of Donald Trump.

4 days ago

Law enforcement officers head into the University of Nevada, Las Vegas, campus after reports of an ...

Associated Press

Police say 3 dead, fourth wounded and shooter also dead in University of Nevada, Las Vegas attack

Police said a suspect was found dead Wednesday as officers responded to an active shooter and reports of multiple victims at UNLV.

4 days ago

President Joe Biden's son, Hunter Biden, leaves after a court appearance, July 26, 2023, in Wilming...

Associated Press

Republicans threaten contempt proceedings if Hunter Biden refuses to appear for deposition

House Republicans are threatening to hold Hunter Biden in contempt if he does not show up this month for a closed-door deposition.

5 days ago

Sen. Tommy Tuberville, R-Ala., listens to a question during a news conference, March 30, 2022, in W...

Associated Press

Tuberville is ending blockade of most military nominees, clearing way for hundreds to be approved

Sen. Tommy Tuberville announced Tuesday that he's ending his blockade of hundreds of military promotions, following heavy criticism.

5 days ago

An employee works inside the Hanwha Qcells Solar plant on Oct. 16, 2023, in Dalton, Ga. On Tuesday,...

Associated Press

US job openings fall to lowest level since March 2021 as labor market cools

U.S. employers posted 8.7 million job openings in October, the fewest since March 2021, in a sign that hiring is cooling.

6 days ago

Megyn Kelly poses at The Hollywood Reporter's 25th annual Women in Entertainment Breakfast, Dec. 7,...

Associated Press

The fourth GOP debate will be a key moment for the young NewsNation cable network

By airing the fourth Republican presidential debate, NewsNation network will almost certainly reach the largest audience in its history.

6 days ago

Sponsored Articles

Follow @iamdamonallred...

Avoid a potential emergency and get your home’s heating and furnace safety checked

With the weather getting colder throughout the Valley, the best time to make sure your heating is all up to date is now. 

Follow @KTAR923...

The 2023 Diamondbacks are a good example to count on the underdog

The Arizona Diamondbacks made the World Series as a surprise. That they made the playoffs at all, got past the Milwaukee Brewers in the NL Wild Card round, swept the Los Angeles Dodgers in the NLDS and won two road games in Philadelphia to close out a full seven-game NLCS went against every expectation. Now, […]

Follow @KTAR923...

West Hunsaker at Morris Hall supports Make-A-Wish Foundation in Arizona

KTAR's Community Spotlight this month focuses on Morris Hall and its commitment to supporting the Make-A-Wish Foundation in Arizona.

Australia’s central bank raises key interest rate to 3.1%