Australian interest rates hit 11-year high

STORY: Australian interest rates have hit an 11-year high.

On Tuesday (June 6) the country’s Reserve Bank lifted its benchmark by another quarter point to 4.1%.

And policymakers warned there could be more to come.

The bank says further tightening may be needed to get inflation back down to its target level of 2-3%.

It cited low unemployment and a lack of spare capacity in the economy as among factors that could push prices higher.

One analyst told Reuters the central bank seemed less confident than before on the future path of inflation.

The move saw the Australian dollar jump close to 1% against the U.S. dollar.

Markets are now pricing in a 60% chance of another hike in July.

The RBA has now raised rates by a total of four percentage points since May last year.

That’s its most aggressive monetary tightening in modern history.

The bank now predicts inflation will return to its target level by mid-2025 - a slower decline than in many other economies.

GDP figures out Wednesday (June 7) are expected to show Australian growth slowing.

RBA governor Philip Lowe says taming inflation without further crippling growth will be a tricky balancing act.