Reserve Bank governor Michele Bullock has defended lifting interest rates, saying high inflation would hurt households even more.
The governor of the Reserve Bank of Australia, Michele Bullock, addressed media in Sydney after the RBA lifted the cash rate to 3.85%.
The quarter-point increase, announced at the end of the central bank’s two-day meeting, was the first rate hike in more than two years.
Bullock said she understood mortgage holders were disappointed and acknowledged the decision would increase financial pressure on households.
However, she said allowing inflation to remain elevated would be worse, driving up everyday costs such as groceries, services and healthcare.
Bullock said the board had underestimated how quickly consumer demand would rebound after last year’s rate cuts.
She said several global downside risks that concerned the bank last year had not materialised, prompting the board to act.
