Canberra, May 3 (IANS): After dropping interest rates down to historic low levels during the pandemic, the Reserve Bank of Australia (RBA) has lifted interest rates by 0.25 to 0.35 per cent, the first rise since 2010, in an effort to calm growing inflation.

RBA Governor Philip Lowe said that it was now "the right time" to withdraw accommodative monetary support designed to help the Australian economy through the Covis-19 pandemic, reports Xinhua news agency.

"The economy has proven to be resilient and inflation has picked up more quickly, and to a higher level, than was expected," said Lowe.

Figures released by the Australian Bureau of Statistics (ABS) last week showed inflation had reached a two-decade high of 5.1 per cent in the last 12 months.

This has prompted widespread calls for the central bank to step in to deal with inflation that has begun to stretch the budgets of Australians.

Lowe said that while the Reserve Bank expects further rises in inflation in the short-term as supply-side demand is resolved, inflation is expected to return to the RBA's target of 2 to 3 per cent.

"The central forecast for 2022 is for headline inflation of around 6 per cent and underlying inflation of around 4.75 per cent, by mid-2024," he said.