The Reserve Bank has raised interest rates for the ninth meeting in a row, taking the cash rate target to its highest level since September 2012.

The 0.25 of a percentage point increase at today’s RBA board meeting leaves the benchmark rate at 3.35 per cent, with average variable mortgage rates now topping 6 per cent.

Global inflation remains very high. It is, however, moderating in response to lower energy prices, the resolution of supply-chain problems and the tightening of monetary policy. It will be some time, though, before inflation is back to target rates. The outlook for the global economy remains subdued, with below average growth expected this year and next.

In Australia, CPI inflation over the year to the December quarter was 7.8 per cent, the highest since 1990. In underlying terms, inflation was 6.9 per cent, which was higher than expected. Global factors explain much of this high inflation, but strong domestic demand is adding to the inflationary pressures in a number of areas of the economy.

Inflation is expected to decline this year due to both global factors and slower growth in domestic demand. The central forecast is for CPI inflation to decline to 4.75 per cent this year and to around 3 per cent by mid-2025.

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