Australia raises cash rate by 50 basis points

By Gokhan Ergocun

ISTANBUL (AA) – Australia's central bank on Tuesday raised its policy interest rate – cash rate – by 50 basis points to 2.35%.

The Reserve Bank of Australia also increased the interest rate on exchange settlement balances by 50 basis points to 2.25%.

It aims to return the annual inflation rate in the country to 2-3% from 6.1% in June – the highest level since the early 1990s.

However, the bank's inflation expectations are around 7-8% through 2022, roughly 4% for 2023 and about 3% for 2024.

"The path to achieving this balance is a narrow one and clouded in uncertainty, not least because of global developments," the bank's governor Philip Lowe said in a statement.

"The outlook for global economic growth has deteriorated due to pressures on real incomes from high inflation, the tightening of monetary policy in most countries, Russia's invasion of Ukraine, and the COVID containment measures and other policy challenges in China," he added.