Australia Interest Rate

The Reserve Bank of Australia said it must rein in demand growth to restore price stability, after delivering its first rate hike in two years earlier this week. Governor Michele Bullock told lawmakers Friday that stronger-than-expected demand and persistent supply constraints risk keeping inflation elevated. She added that while the global economy has shown resilience, significant uncertainties remain amid trade and geopolitical risks. The central bank lifted rates by 25bps to 3.85% after inflation reaccelerated following three cuts last year. Consumer prices have exceeded forecasts for two straight quarters, staying well above the 2%–3% target. Underlying inflation rose to 3.4% in Q4, the highest in over a year, and is projected to peak at 3.7% by mid-year before gradually easing toward target by 2028.