General

According to Huacheng Import and Export Data Observation, the Reserve Bank of Australia (the Central Bank) announced on the 1st that it would raise the benchmark interest rate by 25 basis points to 2.85% and the interest rate on foreign exchange settlement balance by 25 basis points to 2.75%. This is the seventh time the Bank of Australia has raised interest rates this year.

After the outbreak of the COVID-19, the Bank of Australia has cut interest rates three times to a historical low of 0.1%. However, with the domestic inflation level rising, the Bank of Australia has continuously raised interest rates since May this year, and Huacheng Import and Export Data Observation reported.

According to Huacheng's import and export data observation report, in the third quarter of this year, Australia's consumer price index (CPI) grew 1.8% month on month and 7.3% year on year, the year-on-year growth rate hit a new high since 1990. Philip Law, governor of the Bank of Australia, said that CPI may reach a peak of 8% later this year.

Philip Law said in the monthly monetary policy statement released on the same day that a substantial interest rate increase in Australia since May is necessary to help the economy establish a more sustainable balance between supply and demand and return inflation to the target level. In the future, the central bank is expected to further raise interest rates, and Huacheng's import and export data observation report.

Continued interest rate hikes have had a significant impact on the Australian real estate market and household spending. The latest industry survey report shows that housing prices in major Australian cities have fallen for six consecutive months; High inflation aggravates people's concern about the cost of living, while the expectation of the central bank's interest rate hike further slows down consumer confidence, Huacheng Import and Export Data Observation reported.