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0.25% Interest Rate Rise For November 2022

Interest Rate November

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The Reserve Bank of Australia (RBA) today decided to increase the official cash rate for the seventh consecutive month, this time by 0.25% to 2.85%.

Today’s increase follows higher than anticipated September quarter Consumer Price Index (CPI) figures as the RBA continues to battle inflation and the adverse impacts this has on the Australian economy.

As with most countries, inflation in Australia is perceived to be too high. Year to date for September, the CPI inflation rate was 7.3 per cent, the highest it has been in more than three decades.

Inflation

A further increase in inflation is expected over the months ahead, with inflation now forecast to peak at around 8 per cent later this year.

Inflation is then expected to decline next year due to the ongoing resolution of global supply-side problems, recent declines in some commodity prices and slower growth in demand.

RBA governor Philip Lowe indicated the central bank had weighed up the rapid rise in the cash rate to date and the delayed impact on borrowers, against the current elevated inflationary environment, with persisting inflationary pressures.

The RBA previously forecasted inflation to reach 7.75% over 2022. Its peak inflation forecast has now been revised to 8%.

Over the year to September, Lowe noted that CPI inflation reached 7.3% – the highest in over three decades.

Global inflation

“Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role. Returning inflation to target requires a more sustainable balance between demand and supply,” Lowe said.

Lowe said the economy continued to “grow solidly”, and the labour market remained very tight, with wages expected to rise.

“The board will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms in the period ahead,” he said.

Lowe said the board has “materially” increased rates since May.

The official cash rate has been raised from 0.1 per cent to 2.85 per cent in seven consecutive board meetings.

“The size and timing of future interest rate increases will continue to be determined by the incoming data and the board’s assessment of the outlook for inflation and the labour market,” he said.

“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”

Medium-term inflation expectations remain well anchored, and this must remain the case. The bank’s central forecast is for CPI inflation to be around 4¾ per cent over 2023 and a little above 3% over 2024.

With the ever-changing interest rate environment, now is the time to contact your home loan broker, What If We Finance. As a leading independent mortgage broker, we can help you find a better deal and fight the impact of rising interest rates.

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