Governor Philip Lowe noted in a statement that over the year to September, the CPI inflation rate of Australia was 7.3 per cent, the highest it has been in more than three decades, reports Xinhua news agency.

The central bank’s move to increase interest rates materially since May “has been necessary to establish a more sustainable balance of demand and supply in the Australian economy to help return inflation to target”, said the Governor.

As a further rise in inflation is possible over the coming months, with inflation now forecast to peak at around 8 per cent later this year, the central bank’s board expects more rate hikes to follow.

The board’s priority is to return inflation to the 2-3 percent range over time, Lowe added.

According to a report from the Australian Financial Review, the latest increase takes the country’s cash rate to its highest level since April 2013, while the leap from 0.1 per cent to 2.85 per cent also marks the fastest tightening cycle in almost 30 years.

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