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Australia hikes interest rates to rein in inflation

SYDNEY (AFP) – Australia’s central bank raised interest rates more than expected yesterday and warned of more increases as officials try to rein in “significantly” high inflation.

Governor Philip Lowe said the Reserve Bank’s main lending rate would go up half a percentage point to 0.85 per cent, surprising analysts who had tipped a quarter point lift.

He also said “extraordinary” support for the economy via low rates would continue to be unwound.

The move comes as inflation has seen the price of lettuce increase 300 per cent and sent already sky-high house prices in major cities soaring by a quarter since the start of the pandemic.

“While inflation is lower than in most other advanced economies, it is higher than earlier expected,” Lowe said. “Global factors, including COVID-related disruptions to supply chains and the war in Ukraine, account for much of this increase in inflation,” he added, while warning that “domestic factors are playing a role too.”

A man walks past the Reserve Bank of Australia building in the central business district of Sydney. PHOTO: AFP
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