Why the RBA is predicted to deliver a third straight interest rate hike this week
Summary
The Reserve Bank of Australia (RBA) is expected to raise interest rates for the third time in a row this week to control inflation. Although the recent inflation rise is mainly due to higher petrol prices caused by the Middle East conflict, the RBA wants to show it is serious about keeping inflation under control.Key Facts
- Financial markets predict about an 80% chance of a rate increase by the RBA on Tuesday.
- Inflation rose to 4.6% in the year to March, the highest in two and a half years.
- The recent spike in petrol prices, up over 30% in one month, is the main reason for the inflation increase.
- Higher interest rates make loans, like mortgages, more expensive for around 3.6 million Australian households.
- Economists say the RBA’s rate hike cannot fix inflation caused by global oil supply problems in the short term.
- The RBA wants to send a clear message to businesses and workers that it will control inflation.
- Before the conflict in the Middle East, inflation was already at uncomfortably high levels.
- The RBA’s monetary policy board narrowly agreed to raise rates last month and is expected to vote more clearly for another hike this time.
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