Decision to lift interest rates influenced by higher-than-forecast rent increases, RBA says

Philip Lowe, the Reserve Bank of Australia governor. The RBA board in May weighed up leaving interest rates unchanged or increasing them for the 11th time in 12 meetings. Photograph: Matt Jelonek/AAP

The Reserve Bank’s surprise decision to lift interest rates this month was “finely balanced” and aimed at diminishing the risks of high inflation becoming entrenched in the economy.

Those risks include “strong population and low rental vacancy rates” pushing rental growth “even higher” than the RBA’s main forecast, the bank said in the minutes from its 2 May board meeting that hiked the cash rate another 25 basis points to 3.85%.