Ian Waldie | Bloomberg | Getty Images Australia has raised interest rates for the first time in more than a decade, a much-anticipated move as consumer prices rise. The central bank said on Tuesday that the cash rate would rise by 25 basis points to 0.35% – the first rate hike since November 2010. Philip Lowe, Governor of the Reserve Bank of Australia, said it was time to begin withdrawing some of the “emergency monetary support” that was put in place to help the Australian economy during the pandemic. “The economy has proven resilient and inflation has risen faster and to a higher level than expected,” Lowe said in a statement. “There is also evidence that wage growth is accelerating. Given this and the very low level of interest rates, it is advisable to start the process of normalizing monetary conditions.” The increase was higher than analysts’ estimate for 15 basis points at 0.25%, according to Reuters’s average forecast of 32 economists.

Analysts widely expected the central bank to raise interest rates, given the rapid rise in inflation. Prices of food, gasoline and other consumer goods have all risen in the last quarter. Australia’s consumer price index jumped 2.1% in the first quarter, beating expectations for a 1.7% increase, according to data last week. On an annual basis, consumer inflation jumped 5.1% – the highest since 2001 and higher than expected to grow 4.6%. Lowe acknowledged in a statement that inflation had risen more than expected, although it remained lower than in most other advanced economies. “This rise in inflation largely reflects global factors. But domestic capacity constraints are becoming more and more important and inflationary pressures have widened, with companies being more prepared to pass on cost increases to consumer prices.” he said. Further price increases are expected in the near future, but as supply-side disruptions are resolved, Lowe said inflation is expected to fall back to the target range of between 2% and 3%. Prospects for Australia’s gross domestic product also “remain positive” and are projected to grow by 4.25% in 2022 and 2% next year, Lowe said. However, he noted that there are uncertainties that could affect the global economy, such as the Russia-Ukraine war and the Covid disruption in China. This is breaking news. Check again for updates.