Australia's central bank signals more tightening ahead after hiking rates to decade high | CNN Business

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Australia’s central bank raised its cash rate by 25 basis points to a decade-high of 3.35% and reiterated that further increases would be needed, in a more hawkish policy tilt than many had expected.

Australia’s central bank raised its cash rate by 25 basis points to a decade-high of 3.35% on Tuesday and reiterated that further increases would be needed, in a more hawkish policy tilt than many had expected. Wrapping up its February policy meeting, the Reserve Bank of Australia also dropped previous guidance that it was not on a pre-set path and forecast inflation would only return to the top of its target range of 2-3% by mid-2025.

Inflation is expected to decline to 4.75% this year and only slow to around 3% by mid-2025, according to the RBA’s latest forecasts. The RBA also expects economic growth to average around 1.5% over 2023 and 2024. The interest rate increases so far, including Tuesday’s move, will add over A$900 a month in repayments to the average A$500,000 mortgage, according to RateCity, a deadweight for a population that holds A$2 trillion in home loans.

 

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