Sydney Australia’s central bank surprised markets with an unexpectedly small hike in interest rates, putting the country’s currency under pressure. The Reserve Bank of Australia (RBA) raised interest rates by 25 basis points to 2.6 percent on Tuesday, saying more hikes were needed.
This is the sixth rate hike in six months. The key interest rate is now at its highest level in nine years.
“The key interest rate has been raised significantly in the short term,” Fed Governor Philip Lowe said. Now that they want to take time to examine the prospects for inflation and economic growth in Australia, Lowe justified the relatively small rate hike.
Investors had expected a 50 basis point increase. The Australian dollar lost almost 1 percent against the US dollar at its peak.
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