Why are interest rates rising?
The Reserve Bank of Australia has raised the official cash rate for the first time in nearly 12 years, making life even more expensive for many Australians who own a home. On 02/05/2022 RBA announcement took the official cash rate 25 basis points higher to 0.35%, the first interest rate rise since November 2010. With surging inflation already putting pressure on households through higher costs at the checkout, many are wondering why the RBA would also move to increase mortgage repayments with a higher cash rate. Why are interest rates rising? The RBA has three major goals: price stability, full employment, and the economic prosperity and welfare of the Australian people. To achieve this, the RBA has an inflation target of between 2% to 3% on average, over time, and the cash rate is the main tool used to manage inflation. Last month, inflation data by the Australian Bureau of Statistics confirmed the Consumer Price Index (also known as headline infla...