RBA Raises Rates Amid Inflation, Recession Risks

0:00This is Sydney News Today, every story, every city, every day. The Reserve Bank of Australia raised interest rates for the second time this year, even though its board was closely split on the decision. Inflation sits at 3.8%, well above the bank's 2-3% target, driven by an economy growing faster than expected, and a strong jobs market. Higher petrol prices from the Middle East conflict are adding to cost pressures, but the bank says that's not why they acted. Instead, excess demand in the economy is the main issue, and rates need to rise to cool it down by making borrowing more expensive for households and businesses. Australians are feeling the pinch with bigger mortgage payments and fuel bills, prompting questions about whether the petrol spike alone would tighten. Spending enough, many wonder if rate hikes just punish borrowers without fixing global supply shocks. Reserve Bank Governor Michelle Bullock stressed that higher fuel costs won't curb demand sufficiently on their own. The board's tough talks show their weighing on-going risks,

1:02possibly holding off on another hike in May, if the situation shifts. Looking ahead, recession risks are real, as the bank walks a narrow path to tame inflation without spiking unemployment. Economist Warren a downturn might be needed to hit the target, but the goal is to avoid it if possible. The daily news now is made possible with support from our sponsor. What is cooler than cool? A pillow that plays your sound, S-O-L-I, solely pillow.com. Made in AI.