Australia’s central bank has raised the nation’s interest rates for the first time in more than a decade.
The rise will put extra strain on household budgets as Australia prepares for an election that is heavily focused on the rising cost of living.
The Reserve Bank of Australia (RBA) lifted the cash rate to 0.35% on Tuesday.
The move is designed to combat rising inflation, which is at a 21-year high.
RBA Governor Philip Lowe said although inflation had picked up more quickly than expected, unemployment was low and there was evidence wage growth would improve.
It was time to withdraw “some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic”, he said in a statement.
Although the economic outlook for Australia remains positive, Mr Lowe said said further rises in interest rates were imminent.
The last time rates rose during an election campaign was in 2007, when it was widely seen to negatively impact John Howard before he lost government.
Prime Minister Scott Morrison dismissed suggestions the decision would impact his chances of re-election on 21 May.
“It’s not about politics,” he said. “It’s not about me.”
Source: BBC