How Australia's first interest rate hike in more than a decade could impact the election
Categories: US NEWS
Central banks around the world are raising interest rates. The US Federal Reserve is expected to raise US rates by half of one per cent tomorrow and, on Thursday, the Monetary Policy Committee of the Bank of England is expected to raise its main policy rate for the fourth consecutive meeting.Others to have raised interest rates so far this year include the Riksbank, Sweden's central bank, which last week raised its main policy rate above zero for the first time since October 2014 and the Reserve Bank of New Zealand which, last month, raised interest rates by the most in 22 years. The central banks of South Korea, Canada, Chile, the Czech Republic, Poland, Israel, South Africa and Mexico have also raised interest rates during the last six weeks. To that list can now be added the Reserve Bank of Australia which, overnight, raised its main policy rate from 0.1% to 0.35%. It was the bank's first interest rate rise since November 2010.Explaining the move, Philip Lowe, the bank's governor, said now "was the right time to begin withdrawing some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic". He added: "The economy has proven to be resilient and inflation has picked up more quickly, and to a higher level, than was expected. There is also evidence that wages growth is picking up. Given this, and the very low level of interest rates, it is appropriate to start the process of normalising monetary conditions."Mr Lowe pointed out that, while it was lower than in some other advanced economies, inflation in Australia had picked up recently and by more than expected.