“Price stability is a prerequisite for a strong economy and a sustained period of full employment. Given this, the Board’s priority is to return inflation to the 2–3 per cent range over time,” said the RBA.
Interest rates have seen another increase after the Reserve Bank of Australia (RBA) said they expect more to be made over the coming year.
A statement from RBA Governor Philip Lowe detailed that interest rates would increase to 2.85 per cent while interest rates on Exchange Settlement would go up to 2.75 per cent.
“As is the case in most countries, inflation in Australia is too high. Over the year to September, the CPI inflation rate was 7.3 per cent, the highest it has been in more than three decades,” he said.
“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. Returning inflation to target requires a more sustainable balance between demand and supply.”
The Australian economy is fairing well and is growing solidly says the RBA but that growth will slow down next year inline with the global economy.
RBA members predict that inflation will peak at eight per cent later this year but it’s expected it will decline next year to around 4.75 per cent and just above three per cent in 2024.
They said reaching a low inflation rate remains their most important goal.
Unemployment rates will remain at 3.5 per cent for the coming months, the lowest it’s been in 50 years but will slightly increase to four per cent in 2024.
The RBA has said that the global economy remains a big concern for them as well as household spending.
“The Board recognises that monetary policy operates with a lag and that the full effect of the increase in interest rates is yet to be felt in mortgage payments,” said Mr Lowe.
“Higher interest rates and higher inflation are putting pressure on the budgets of many households.
“Consumer confidence has also fallen and housing prices have been declining following the earlier large increases.”
