SYDNEY, Dec. 6 (Xinhua) -- The Reserve Bank of Australia (RBA) on Tuesday lifted the cash rate target by 25 basis points to 3.1 percent, delivering the eighth straight increase since May.
The cash rate is now at its highest level in over a decade since December 2012 when it was 3.0 percent.
RBA Governor Philip Lowe said in a statement that the board of the bank expects to increase interest rates further over the period ahead, but it is not on a pre-set course.
According to the statement, inflation in Australia was "too high" at 6.9 percent over the year to October, with inflation forecast to peak at around 8 percent over the year to the December quarter and then expected to decline next year.
Reaffirming its priority of re-establishing low inflation and returning inflation to the 2-3 percent range, the central bank believed that the substantial cumulative increase in interest rates has been necessary to ensure that the current period of high inflation is only temporary.
"The Board recognizes that monetary policy operates with a lag and that the full effect of the increase in interest rates is yet to be felt in mortgage payments," said Lowe.
The governor pointed out that amid uncertainties at home and abroad, the path to achieving the needed decline in inflation and achieving a soft landing for the economy remains a narrow one.
The board, however, "remains resolute in its determination to return inflation to target and will do what is necessary to achieve that," Lowe added.
Speaking on the announcement by the RBA, Australian Treasurer Jim Chalmers told the Australian Broadcasting Corporation that interest rate rises are already having "harsh and heavy" consequences for a lot of household budgets.
"But as the RBA has made clear today, we expect the full impact of these rate rises will be felt down the track," said the treasurer.
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