The Reserve Bank has lifted official interest rates for the second time in as many months while consumer confidence fell amid cost-of-living concerns.
RBA governor Philip Lowe announced a larger-than-expected 0.5 percentage point increase in the cash rate to 0.85 per cent following the board’s June meeting on Tuesday afternoon.
Lowe said the 0.5 percentage point move was driven by current inflation pressures and very low interest rates.
“While inflation is lower than in most other advanced economies, it is higher than earlier expected,” he said. “The board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead.”
It’s only the second increase in the official interest rate since November 2010, after the bank last month lifted the cash rate from a record-low 0.1 per cent to 0.35 per cent in the lead-up to the federal election.
That was the first time the bank had intervened during an election campaign since 2007, but the RBA flagged it was the start of a series of rises as it returns rates to a “more normal” level.
Prime Minister Anthony Albanese has promised to return often to Indonesia as leader, saying the “diverse and beautiful country” and its friendship with Australia is very important.
Giving a speech to university students in the port city of Makassar, Albanese said it was his eighth visit to Indonesia. He spoke about the warmth of the welcome he had received every time, and said he would forever cherish the bike ride he and Indonesian President Joko Widodo shared on Monday.
“It was such an enjoyable way to see the magnificent grounds there, but it was also a great pleasure to engage with the president in such a personal one-on-one way yesterday. And it will be a memory that I cherish for the rest of my life,” he said.
Albanese received applause when he noted his new ministry includes two Muslim Australians: Ed Husic and Anne Aly.
“I’ve brought one of them with me!” the prime minister said, referring to Industry Minister Husic, who is part of the delegation visiting Indonesia. “For both of them, the Muslim population in their electorate is a very small majority. They received support from across the Australian community,” Albanese said.
“I take this as really heartening confirmation that we are maturing as a nation. This is the enduring value of Australian multiculturalism and the great spectrum of Australia’s religious and cultural diversity.”
Albanese said there were now 600,000 Australian Muslims and “they are a vital and integral part of the rich mosaic of Australian society”.
The prime minister also revealed he specifically requested to visit Makassar because of the centuries-old trade links between Indonesians on the island and Indigenous Australians.
“Centuries ago, the sea route between here and northern Australia was alive with a flourishing trade,” he said. “The long relationship between the Makassan seafarers and First Nations people of Australia was built around trade. But what was most striking was that it was built on mutual respect a relationship of people.”