Australia’s central bank raised its benchmark interest rate for the first time in more than 11 years
Australia’s central bank raised its benchmark interest rate for the first time in more than 11 years
Australia’s central bank raised its benchmark interest rate for the first time in more than 11 years on 3 May. The cash rate increased from 0.1% to 0.35%.
The rise was widely expected after official data released last week showed Australia’s inflation rising to 5.1% in the year through March. This is the highest annual rate since 2001 when a newly implemented 10% federal consumption tax created a temporary spike.
Inflation in the latest March quarter was sharply higher than 3.5% three months ago. The March result was driven by increased fuel and housing costs, as well as food shortages triggered by recent Australian floods.
The Reserve Bank of Australia adjusts interest rates to keep inflation within the 2-3% target band.
The cash rate is at a record low of 0.1% since November 2020.
The bank last increased interest rates in November 2010. The cash rate then increased by a quarter percentage point to 4.75%.
It is the first time that the bank, whose government’s independence was enshrined in law in 1996, has changed interest rates during a federal election campaign since 2007.
Prime Minister John Howard’s Conservative government was ousted from office after more than 11 years in power, two weeks after the benchmark rate rose 0.25 percent to 6.75% in November 2007.
Prime Minister Scott Morrison’s Conservative government is seeking a rare fourth three-year term in elections due on May 21.