AUSTRALIA’S central bank hiked interest rates to a near eight-year high today as it joins others in trying to bring down sky-high inflation and warned of further increases that would hit families’ pockets.

The Reserve Bank of Australia lifted borrowing costs by 50 basis points to 2.35%, the highest since that start of 2015.

The path to bring prices back into balance was a “narrow one and clouded in uncertainty, not least because of global developments”, the bank said in a statement.

It added that while the hike “will help bring inflation back to target”, more were expected in the coming months.

“Inflation in Australia is the highest it has been since the early 1990s and is expected to increase further over the months ahead,” the policy board said.

The central bank estimates inflation will peak at 7.75% this year, before dropping to 4% next year.

Federal Treasurer Jim Chalmers said the rate hike will be “very difficult news for a lot of Australians with a mortgage”.

“The fact we knew it was coming doesn’t make it any easier for people. This is tough.

“This will tighten the screws on family budgets,” he said.

The move comes as central banks around the world are forced to ramp up rates with inflation at multi-decade highs. The European Central Bank is tipped to announce a second lift on Thursday, while the US Federal Reserve is seen tightening further later in the month. – AFP, September 6, 2022.