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RBA sharply raises official interest rate to 0.85%

The Reserve Bank of Australia announced a sharp increase in the official benchmark interest rate by 50 basis points to 0.85% after its interest rate meeting on Tuesday (7th), which was much higher than the market's original estimate of 25 basis points. In a statement after the meeting, RBA Governor Lowe pointed out that due to high inflation, interest rates are still relatively low relative to the current level, which is the main reason for the bank's decision to raise interest rates significantly. The remarks significantly enhanced the market's expectations for the central bank to raise interest rates this year. According to the latest changes in interest rate futures, the market expects that the probability of the RBA raising interest rates by 50 basis points in July has reached a consensus of 100%. By the end of this year, there is a chance to raise interest rates to 3.25%. However, in view of the overall strength of the US dollar, the Australian dollar did not benefit greatly after the interest rate hike, temporarily hovering at the level of 72 US cents.
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