Australia raised interest rates more than expected to prevent inflation, house prices continued to rise
Australian Treasurer Jim Chalmers says rising interest rates are “bad news for homeowners who are faced with a skyrocketing cost of living” – Artwork: AAP
The decision of the Central Bank of Australia surprised analysts, who had only forecast an increase of about 0.25 percentage points. The Bank of Australia leaves open the possibility that it will continue to increase bank interest rates in the near future to cope with inflationary.
In Australia, the price of some vegetables has now increased by 300%, while already sky-high house prices in cities continue to rise sharply quarter-on-quarter since the outbreak of COVID-19.
Referring to the cause of high inflation, Bank of Australia Governor Philip Lowe said that in addition to global factors such as supply chain disruptions due to COVID-19 and the conflict in Ukraine, domestic factors such as the market The tight labor market and severe flooding also contributed to Australia’s inflation rising to 5.1% today.
The COVID-19 pandemic has pushed Australia’s economy into its first recession in 30 years and the country is slowly recovering. However, the Central Bank of Australia’s interest rate hike is expected to weigh heavily on the Australian economy, because Australia is a country with a particularly high debt ratio from expensive mortgages.
Mr. Lowe said the bank would be watching closely to see if that double shock caused consumption to fall more than expected. He expressed concern with the global economic outlook, due to uncertainties related to the COVID-19 epidemic, and the Russia-Ukraine conflict that could push up the prices of energy and agricultural products.
On June 7, Australian Treasurer Jim Chalmers said “it will be a tough winter for many”, and warned Australians to prepare for an “expensive winter”.
“We are facing an extremely difficult test – a test that combines many things. Inflation is high and rising, interest rates are rising, and real wages are falling at a time when the ability to cope with these challenges is increasing. Our challenge is limited,” he said.
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