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Australia sharply raised interest rates to “cool down” inflation

Australians buy goods at supermarkets. (Image: Getty Images)

Decision of the Central Bank Australia surprised analysts, who had only forecast an increase of about 0.25 percentage points. The Bank of Australia left open the possibility that it will continue to raise interest rates in the near future to cope with inflation.

In Australia, the price of some vegetables has now increased by 300%. Already sky-high house prices in cities have continued to rise sharply every quarter since the outbreak of the COVID-19 epidemic.

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 along with 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 gradually 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.

“The bank will be looking closely to see if that double shock causes consumption to fall more than expected,” Mr Lowe said. He expressed concern with the global economic outlook due to the unpredictable things related to the COVID-19 epidemic and the conflict between Russia and Ukraine that could push up the prices of energy and agricultural products.

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