SYDNEY—The Reserve Bank of Australia surprised financial markets by raising interest rates a month after pausing to assess the impact of earlier tightening on the economy, illustrating how central banks are wary of declaring victory over inflation.
The RBA lifted its official cash rate by a quarter of a percentage point to 3.85%, arguing that while inflation had already peaked it was still too high at 7% and could take a couple of years before it reaches the top end of a 2% to 3% target range.
SYDNEY—The Reserve Bank of Australia surprised financial markets by raising interest rates a month after pausing to assess the impact of earlier tightening on the economy, illustrating how central banks are wary of declaring victory over inflation.
The RBA lifted its official cash rate by a quarter of a percentage point to 3.85%, arguing that while inflation had already peaked it was still too high at 7% and could take a couple of years before it reaches the top end of a 2% to 3% target range.