{"id":43415,"date":"2023-11-07T06:58:29","date_gmt":"2023-11-07T06:58:29","guid":{"rendered":"https:\/\/prosfunds.com\/business\/australia-returns-to-raising-interest-rates-as-inflation-persists\/"},"modified":"2023-11-07T06:58:29","modified_gmt":"2023-11-07T06:58:29","slug":"australia-returns-to-raising-interest-rates-as-inflation-persists","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=43415","title":{"rendered":"Australia returns to raising interest rates as inflation persists"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=60aa314b-b8e2-4299-ac0e-d212f6d1ae0b\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Australia\u2019s central bank has raised interest rates for the first time since June in response to persistent inflation.<\/p>\n<p>The Reserve Bank of Australia increased interest rates by a quarter of a percentage point to 4.35 per cent and raised its inflation expectations for 2024. It said that while inflation had peaked this year, it was still \u201ctoo high\u201d and was returning to a target range of 2 to 3 per cent \u2014 which it is now expected to reach in 2025 \u2014 more slowly than anticipated.<\/p>\n<p>The action by the Australian central bank, which raised interest rates 12 times between April last year and June to an 11-year high, runs contrary to decisions by global peers including the Bank of England, the Federal Reserve and the European Central Bank, which all opted to hold rates in the past month.<\/p>\n<p>The increase was the first under Michele Bullock, who replaced Philip Lowe as governor of the RBA in September. The tightening was widely anticipated after data showed inflation and consumer spending had risen over the past month.<\/p>\n<p>Bullock said growth in the Australian economy was below its historical trend but had been stronger in the first half of the year, with house prices rising and the labour market still tight.<\/p>\n<p>\u201cIf high inflation were to become entrenched in people\u2019s expectations, it would be much more costly to reduce later, involving even higher interest rates and a larger rise in unemployment,\u201d she said in a statement.<\/p>\n<p>Analysts had put an 80 per cent chance on the prospect of an increase this time, but they were split over whether the RBA would raise rates again in December ahead of new inflation data in February.<\/p>\n<p>Paul Bloxham, chief economist for Australia and New Zealand at HSBC, said: \u201cWe see the RBA as now in \u2018calibration mode\u2019\u2009.\u2009.\u2009.\u2009we expect that a follow-up hike in December is unlikely.\u201d<\/p>\n<p>Citi\u2019s Josh Williamson noted that the RBA had increased its inflation forecast and lowered its unemployment prediction despite the rise in interest rates, meaning it appeared comfortable with the economy running \u201ceven hotter\u201d as long as productivity increases matched wage growth. <\/p>\n<p>Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, said the return to tightening would add to the \u201ctightrope\u201d for businesses in the country as they sought to manage higher costs, maintain competitive pricing and cope with changes to industrial relations and laws.\u00a0<\/p>\n<p>\u201cThough the hike is intended to combat inflation, it adds another layer of stress on businesses grappling with high input costs and emerging wage pressures,\u201d McKellar said.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/60aa314b-b8e2-4299-ac0e-d212f6d1ae0b\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Australia\u2019s central bank has raised interest rates for the first time since June in response to persistent inflation. The Reserve Bank of Australia increased interest rates by a quarter of a percentage point to 4.35 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-43415","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Australia returns to raising interest rates as inflation persists | Prosfunds<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Australia\u2019s central bank has\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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