The Reserve Bank of Australia raised interest rates by 25 basis points to reach 3.35%, as expected at the bank meeting that took place this morning, Tuesday, January 7, in its first meeting in the current year, bringing interest levels to their highest levels since 2012.

And the interest statement issued by the bank stated that inflation in Australia is very high, as is the case in most countries, as the consumer price index reached 7.8% in December on an annual basis, which is the highest rate since 1990, and core inflation rose to 6.9%, but inflation is expected to decline. To 4.75% this year, and to decline to about 3% in the middle of next year, according to the bank’s expectations.

Gross domestic product growth is expected to slow by 1.5% in 2023 and 2024 while the labor market remains weak and the unemployment rate remained at around 3% in the last three months, the lowest rate since 1974, and is expected to rise to 3.75% this year and to 4.5% By the middle of 2025.

The bank affirmed that it is committed to returning inflation to the bank’s target range of 2-3%, stressing that there are strong upcoming interest rate increases in the coming months.

The Australian dollar reacted positively and the pair rose more than 50 pips against the US dollar, as bets increased that interest rates would peak at 3.85%, which is aware of an upcoming 50 basis point hike.