6 December, 2022
Another hit to the household budget just in time for Christmas
The Reserve Bank of Australia (RBA) have increased interests for the eighth time this year, after deciding to increase the cash rate target by 25 basis points to 3.10 percent at today’s meeting (December 6).
The aim of this decision to ease inflation which is currently at 7.3 per cent, but will ultimately put pressure on mortgage holders in the lead-up to Christmas.
RBA Governor Philip Lowe said in a statement that inflation is too high in Australia, and is expected to further increase over the months ahead.
“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,” he said.
“Returning inflation to target requires a more sustainable balance between demand and supply.”
Inflation is forecast to peak at around 8 per cent over the year to the December quarter, however will begin to decline next year.
“(This is) due to the ongoing resolution of global supply-side problems, recent declines in some commodity prices and slower growth in demand,” Governor Lowe said.
“The bank’s central forecast is for CPI inflation to decline over the next couple of years to be a little above 3 per cent over 2024.”
Governor Lowe said that whilst the Board expects to increase interest rates further over the next few months, decisions will be made with consideration of the global economy, household spending and wage and price-setting behaviour.
“The size and timing of future interest rate increases will continue to be determined by the incoming data and the Broad’s assessment of the outlook for inflation and the labour market.
“The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”