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Reserve Bank Governor Michele Bullock has defended the RBA’s decision to raise rates for the first time in two years, following a meeting of the bank yesterday.
Following its first meeting of the year, the bank lifted the cash rate by a quarter percentage point to 3.85 per cent, adding $100 a month to the repayments on a $600,000 mortgage.
It comes after a surprisingly high inflation read of 3.8 per cent for the 12 months to December and unemployment falling to 4.1 per cent.
This masthead’s economics correspondent, Shane Wright, asked Bullock why the RBA keeps getting it so wrong, as inflation has only been within the mandated band in eight out of 40 quarters in a decade.
Bullock responded: “I have no particular response other than to say we are determined, and the board is determined, to bring it back down into the band.”
Commonwealth Bank was the first major bank to pass on the rate hike, followed by Westpac, National Australia Bank and ANZ.
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