Australia raises interest rates for the first time in more than a decade

Specifically, the RBA raised its key lending rate by 25 basis points to 0.35%, marking the first rate hike since November 2010. The RBA leaves the door open for another rate hike.

According to the RBA, the country’s cessation of maintaining interest rates at a record low is due to the interest rate inflationary grew faster than expected. Australia’s March inflation rate was 5.1%. Moreover, house prices in the country have increased in recent years while wage growth has been slow.

Higher interest rates will lead to higher borrowing costs, leaving millions of indebted Australians struggling.

More than a month ago, the RBA still showed patience and affirmed to keep the record low interest rate of 0.1%, although many central banks around the world have moved to tighten monetary policy. However, with the increasing price trend, RBA could not sit still.

U.S. Federal Reserve (Fed) is expected to have more rapid rate hikes as prices are climbing at their fastest rate in decades. The Bank of Canada recently raised its key interest rate target from 0.5% to 1% – the steepest increase in two decades. The Reserve Bank of New Zealand in mid-April also raised its key interest rate by 50 basis points to 1.5%…

The reality in Australia shows that inflation is also becoming a big problem even for an economy that has benefited from the energy crisis, thanks to key exports such as iron ore and coal.

The last time the RBA raised interest rates was in November 2010. The country’s roughly one million mortgage homeowners have never experienced an interest rate hike in decades. Higher borrowing costs will also test the stability of Australia’s housing market – one of the most indebted in the developed world.

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