Australia’s Central Bank Raises Rates for First Time in Two Years

Australia’s central bank has raised its benchmark policy rate for the first time in two years, citing stronger-than-expected economic growth and inflation that is likely to remain above target for some time, Reuters reported.

Concluding its February policy meeting, the RBA raised interest rates by 25 basis points to 3.85%. (Photo: Danausi, Wikimedia Commons) 

The Reserve Bank of Australia (RBA) joins the Bank of Japan as the only developed-world central banks currently tightening monetary policy.

Markets continue to price in rate cuts in the United States, the United Kingdom, and Canada, while the European Central Bank is widely expected to remain on an extended pause.

Concluding its February policy meeting, the RBA raised interest rates by 25 basis points to 3.85%, delivering its first hike in two years and coming just six months after its last rate cut in August.

Markets had priced in a 78% chance of a hike after inflation surprised on the upside in the fourth quarter and unemployment fell to a seven-month low in December.