Interest rates rise to 12-year high

THE central bank has boosted official interest rates by 25 basis points to 7.25 per cent, the highest level in over 12 years, to combat rising inflation.

THE central bank has boosted official interest rates by 25 basis points to 7.25 per cent, the highest level in over 12 years, to combat rising inflation.

The Reserve Bank of Australia (RBA) today said official rates are now at their highest level in 12 years – and analysts are predicting more rate rises could follow given strong growth and high inflation in Australia.

The RBA last raised interest rates in February and before that, in November and August of 2007.

The rate rise will take standard variable lending rates to around 9.25 per cent, the highest in over 11 years.

Mortgage repayments on an average $240,000 loan taken over 25 years will go up by about $40 a month.

The RBA sets rates to keep inflation between its target band of 2 to 3 per cent, but underlying inflation is now approaching 4 per cent despite the RBA’s repeated attempts to place a lid on rising consumer prices by raising rates.

Analysts are warning official interest rates could reach as high as 8 per cent this year given persistently high inflation.