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Happening down under this a.m.: Australian central bank hikes interest rate for second time in five weeks

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The Australian Central Bank appears to have brought to an end its aggressive rate hike cycle
The Australian Central Bank appears to have brought to an end its aggressive rate hike cycle

Australia’s central bank this afternoon local time lifted its benchmark interest rate for a second time in five weeks, changing the cash rate to 0.85 per cent from 0.35 per cent.

When the Reserve Bank of Australia raised the rate by a quarter of a percentage point at its last monthly board meeting on May 3, it was the first increase in more than 11 years.

An increase was widely expected after official data released in April showed that Australia’s inflation rose to 5.1% in the year through March. It is the highest annual rate since 2001, when a newly introduced 10% federal consumption tax created a temporary spike.

Treasurer Jim Chalmers on Tuesday foreshadowed more rate hikes, saying inflation in Australia would worsen.