Surprise move from the Reserve Bank of Australia

Despite the decline in inflation, the Reserve Bank of Australia (RBA) has increased its policy rate once again, contrary to analysts' estimates. In a surprise move, the Reserve Bank of Australia raised its cash interest rate target by 25 basis points to 3.85 percent, stating that inflation in the country is "still too high." Economists had largely expected the central bank to keep its benchmark interest rate steady at 3.6 percent. In a statement, the Reserve Bank said that while recent data showed a decline in inflation, the central forecast is that it will take several years for inflation to return to the top of the target range, with inflation expected to be 4.5 percent in 2023 and 3 percent by mid-2025. The RBA added that its priority was "to return inflation to target" and left the door open for further increases in the future: "A further tightening of monetary policy may be necessary to ensure that inflation returns to target in a reasonable time frame, but this will depend on how the economy and inflation develop."