The Reserve Bank of Australia has raised the cash rate by the biggest margin in one go since February 2000 as it tries to rein in ballooning inflation.
The RBA raised the cash rate by 50 basis points to 0.85 per at its board meeting on Tuesday, the second consecutive monthly increase and larger than most economists had been anticipating.
"Inflation in Australia has increased significantly," RBA governor Philip Lowe said in a statement on Tuesday.
"Higher prices for electricity and gas and recent increases in petrol prices mean that, in the near term, inflation is likely to be higher than was expected a month ago."
Inflation spiked to 5.1 per cent in the March quarter and the RBA had forecast only last month that it would increase further to six per cent by the end of the year, a level not seen since 2000.
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