RBA lifts rates for first time in more than 11 years

THE Reserve Bank has raised the cash rate by 25 basis points to 0.35 per cent.

The Reserve Bank board said that now was the right time to begin withdrawing some of the “extraordinary monetary support that was put in place to help the Australian economy during the pandemic”.

It noted that the economy was resilient and inflation had picked up “more quickly” and to a higher level than expected.

There is also evidence that wages growth is picking up,” it stated.

“Given this, and the very low level of interest rates, it is appropriate to start the process of normalising monetary conditions,” the board wrote in a statement.

“The resilience of the Australian economy is particularly evident in the labour market, with the unemployment rate declining over recent months to 4 per cent and labour force participation increasing to a record high.

“Both job vacancies and job ads are also at high levels. The central forecast is for the unemployment rate to decline to around 3.5 per cent by early 2023 and remain around this level thereafter.

“This would be the lowest rate of unemployment in almost 50 years.”