Australia's Central Bank Surprises with Rate Hike and Signals Further Tightening

Australia's central bank unexpectedly raised interest rates by a quarter-percentage point to 3.85%, the highest level since April 2012, and signaled further policy tightening ahead. The decision comes shortly after an independent review of the RBA recommended overhauling the current board set up and strengthening its communications. Treasurer Jim Chalmers is due in the next month or two to announce whether he will extend Governor Philip Lowe’s term or install someone new. The unexpected hike suggests a shift in the RBA’s assessment of the tradeoff between growth and inflation.