Australia’s central bank on Tuesday lifted its benchmark interest rate for the first time in more than 11 years. The cash rate rose from 0.1% to 0.35% in a move potentially damaging to a government that will seek reelection on May 21.
A rise was widely expected after official data released last week showed that Australia’s inflation rose to 5.1% in the year through March. It is the highest annual rate since 2001, when a newly introduced 10% federal consumption tax created a temporary spike.
Inflation in the latest March quarter was sharply higher than the 3.5% three months earlier. The March result was driven by a surge in fuel and housing costs as well as food shortages created by recent Australian floods.
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