The Australian central bank has again raised its key interest rate in the country. It was the second interest rate hike in a row. With the increase, the central bank wants to combat high inflation in the country.
Like many other countries, Australia is struggling with rising food and fuel prices.
The interest rate rose by 0.50 percentage points to 0.85 percent. That was the largest rate hike since 2000. The central bank also took a larger interest rate step than at the beginning of May when interest rates were raised for the first time since November 2010. Interest rates then rose by a quarter of a percentage point to 0.35 percent. Most economists had expected an interest rate hike of a quarter of a percentage point.
The central bank also hinted that it would raise interest rates further in the future. The size and timing of the interest rate hikes depend on developments in the labour market and on inflation.
Australian inflation has reached its highest level in about twenty years and is well above the central bank’s target. Inflation is expected to increase further in the coming months, but according to the central bank will decrease to a level of 2 to 3 percent next year.