Australia's central bank raised its benchmark rate by a quarter-point on Tuesday after holding the rate for four straight meetings. The policy board of the Reserve Bank of Australia headed by Michele Bullock decided to lift the cash rate target by 25 basis points to 4.35 percent.
The bank also increased the interest rate paid on Exchange Settlement balances by 25 basis points to 4.25 percent.
The bank had held interest rates steady since June following an increase of 4 percentage points since May last year.
"The Board judged an increase in interest rates was warranted today to be more assured that inflation would return to target in a reasonable timeframe," Bullock said.
Although inflation has passed its peak, it is still too high and is proving more persistent than expected a few months ago, the bank noted. Inflation is forecast to be around 3.5 percent by the end of 2024 and at the top of the target range of 2-3 percent by the end of 2025.
