Australia: Reserve Bank Raises Interest Rates

Facts

On Tuesday, the Reserve Bank of Australia (RBA) raised its interest rate by 0.25 percentage points to 4.1% — an 11-year high — and warned that more rate hikes may be needed to bring inflation down.¹
RBA Governor Philip Row said that while "inflation in Australia has passed its peak," its current rate "is still too high." As of April, Australia's annual inflation rate was 6.5%, well above the bank's goal of between 2% and 3%.²
Lowe added that "while goods price inflation is slowing," services price inflation and labor costs are rising briskly, placating productivity growth.²
Following the announcement, the Australian dollar jumped 0.8% to A$0.6667 — its highest point in 2.5 weeks — though three-year bond futures fell by 8 points to 94.345.³
Australia's first quarter GDP numbers are set to be released Wednesday, with growth expected to show a 0.3% decline from the previous month.¹
The RBA's decision comes ahead of the meeting of members of the Federal Open Market Committee next week, with the US central bank expected to keep interest rates in the range of 5% to 5.25%.⁴

Pro-establishment narrative, as provided by The Conversation. Households and businesses will suffer if inflation remains at these levels for too long, which is why tough measures must be taken if the country hopes to keep inflation from permanently entrenching itself in the economy. The RBA is trying to walk a tightrope between acting in the country's best interests and shoring up Labor's political fortunes.
Establishment-critical narrative, as provided by Guardian. Following 12 rate hikes in 14 months, the RBA has seemingly gone rogue in its policy decisions while doing little to relieve average Australians from the rising cost of living. Instead of introducing higher taxes on the wealthy, Labor has allowed the RBA to increase mortgage costs by $15K annually and costs to spiral. The RBA is simply losing its doomed war on inflation.