(Bloomberg) -- The Reserve Bank of Australia's decision to hike interest rates by more than expected just weeks ahead of a federal election quickly led to bickering between the ruling coalition and the opposition Labor Party.
The quarter point hike was “largely reflecting global factors,” Prime Minister Scott Morrison said at a press conference with Treasurer Josh Frydenberg just over an hour after the bank's rate-hike announcement.
Morrison said Australians had already factored the increased repayments into their household budgets but that he sympathized with homeowners facing additional stress on their cost-of-living as a result. Frydenberg said the rate rise had “reaffirmed Australia's economic strength and Australia's economic resilience,” and pointed out the RBA's expectation of increased wage growth.
But the Labor Party, which has been fighting the government's economic track record by highlighting increased housing and other costs, decried the hike.
“This is a full blown cost-of-living crisis on Scott Morrison's watch,” said shadow Treasurer Jim Chalmers shortly after the RBA decision was announced. Chalmers, who will oversee the economy if the opposition Labor Party win the upcoming election, said the Reserve Bank's decision had “completely shredded” Morrison's economic credentials.
RBA Governor Philip Lowe said the rate hike was the result of growing inflationary pressures, both from domestic issues and the lack of a need for further pandemic stimulus, and from rising costs stemming from issues like the war in Ukraine.
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