Reserve Bank of Australia (RBA) Governor Michelle Bullock speaks during a press conference at the bank’s headquarters in Sydney, Australia, Tuesday, April 1, 2025.
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Australia’s central bank raised its policy rate by 25 basis points to 3.85% on Tuesday, marking the Reserve Bank of Australia’s first rate hike since November 2023 as inflation continues to rise.
The move by the Reserve Bank of Australia was in line with expectations of economists polled by Reuters and was based on data showing inflation. the highest level in six quarters.
“Private demand is growing faster than expected, capacity pressures are higher than previously estimated and labor market conditions are somewhat tighter,” the central bank said in a statement, noting that inflationary pressures rose “materially” in the second half of last year.
Senior RBA officials have repeatedly played down expectations of a rate cut. Earlier this year, Reserve Bank of Australia Deputy Governor Andrew Hauser said the likelihood of a rate cut anytime soon was “very low”, citing persistently high inflation. The central bank targets inflation at the level of 2.5%
Governor Michelle Bullock reiterated that stance after the bank’s Dec. 9 rate decision, saying interest rates will continue to fall. was not on the horizon for the near future.
Asked at the time if the bank would consider further increases, Bullock said the bank would evaluate economic data “on a cumulative basis.”
“If inflation remains stable and does not appear to be returning to the Board’s target … the Board may consider whether it is appropriate to keep interest rates where they are or whether to raise them at some point,” he said.
Australian economy increased by 2.1% in the third quarter, up from a revised 2% in the previous quarter and marking the fastest pace of expansion in nearly two years.