Cash rate | Australia's Central Bank increases the cash rate for the fifth time, to 2.35%.

For the fifth consecutive month, Australia's central bank raised its benchmark interest rate, which now stands at 2.35%, reaching a seven-year high.

The Reserve Bank of Australia's decision marked the fourth straight 0.5 percentage point increase in the cash rate.

At its monthly board meeting in May, the bank increased the rate for the first time in more than 11 years, by a quarter percentage point. It has already reached its highest level since the bank reduced the rate from 2.5% to 2.25% in February 2015.

At the monthly board meetings, Reserve Bank Governor Philip Lowe warned that further rate increases would be forthcoming as directors worked to bring inflation down to a target range of 2% to 3%. The Treasury Department predicts that Australian inflation will reach a top of 7.75% in the December quarter, where it is now running at 6.1%.

In a statement, Lowe stated that today's additional interest rate hike would "help bring inflation back to goal and create a more sustainable balance of demand and supply in the Australian economy."

"The board anticipates raising interest rates more in the coming months, but it is not following a predetermined course. The incoming statistics and the board's evaluation of the outlook for inflation and the labor market will serve as a basis for the magnitude and timing of future interest rate rises, Lowe continued.

Some experts worry that by raising rates too soon, the bank would send the economy into a recession.

According to Lowe, his board was working to "keep the economy on a steady keel" by reducing inflation.

Because of global trends, among other things, "the path to attaining this balance is a narrow one and cloaked with uncertainty," Lowe said.

For many Australians who have mortgages, the rate increase is "extremely tough news," according to Treasurer Jim Chalmers.

He claimed that in addition to the additional AU$475 ($323) they have been required to find each month since interest rates started to rise in May, mortgage holders with a typical home loan debt of 500,000 Australian dollars ($340,000) would also need to find an additional AU$145 ($99) per month to service their debt.

To develop a far more resilient economy in the long run that can weather some of those local and international shocks, Chalmers told Parliament, "we must do what we responsibly can to help Australians deal with these pressures in the immediate term."

By the end of the following week, the government will present proposals to Parliament that will lower the price of child care and prescription drugs.

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