MNI BRIEF: RBA Cites Inflation Pressures In 50bps Hike

The Reserve Bank of Australia has cited inflation pressures in its decision to hike official interest rates by a higher than expected 50 basis points on Tuesday.

The RBA board decided to hike rates to 0.85% in the second rate rise in as many months, (See MNI STATE OF PLAY: Inflation To Drive Another RBA Hike).

The central bank said that given the resilience of the Australian economy and current inflation pressures a 50bps rise was appropriate as it withdrew monetary support needed during the pandemic lockdowns. Australian second quarter CPI inflation came in at 5.1% and trimmed mean inflation, the RBA’s preferred measure, is at 3.7% and outside the target range of 2% to 3% for the first time in more than a decade.