THE Reserve Bank of Australia has today officially lifted the cash rate for the first time in more than 10 years, with its target rising from the record-low 0.1 percent to 0.35.

The decision ends months of speculation about interest rate rises after a record increase in inflation over the past year.

In a statement released this afternoon, RBA governor Phillip Lowe said inflation had picked up more quickly than expected and the agency needed to make moves to “normalise monetary conditions”.

“The Board judged that now was the right time to begin withdrawing some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic,” Dr Lowe said.

“The economy has proven to be resilient and inflation has picked up more quickly, and to a higher level, than was expected. There is also evidence that wages growth is picking up.”

Dr Lowe said the outlook for economic growth remained positive, despite the increase in rates and several other challenges.

“There are ongoing uncertainties about the global economy arising from: the ongoing disruptions from COVID-19, especially in China; the war in Ukraine; and declining consumer purchasing power from higher inflation,” he said.

“Household and business balance sheets are generally in good shape, an upswing in business investment is underway and there is a large pipeline of construction work to be completed. Macroeconomic policy settings remain supportive of growth and national income is being boosted by higher commodity prices.”

See today’s special report on the impact of interest rate rises, written by Bush Agribusiness’s Ian McLean.

• Beef Central will have more on interest rates as reaction come in.