For the first time in more than a decade, Australia’s central bank has hiked interest rates.

As Australia prepares for an election that will be primarily focused on the growing cost of living, the increase will put further strain on household budgets.

On Tuesday, the Reserve Bank of Australia (RBA) increased the cash rate to 0.35 percent.

The measure is intended to counteract increasing inflation, which is at its highest level in 21 years.

Although inflation has accelerated faster than projected, unemployment was low, and there was signs that wage growth will increase, according to RBA Governor Philip Lowe.

In a statement, he said it was time to withdraw “some of the exceptional monetary assistance that was put in place to strengthen the Australian economy throughout the epidemic.”

Despite the fact that Australia’s economic forecast remains optimistic, Mr Lowe believes that further interest rate hikes are on the way.

The last time interest rates climbed during an election campaign was in 2007, when it was widely assumed that it would hurt John Howard’s chances of winning the election.

Prime Minister Scott Morrison downplayed claims that the decision will hurt his re-election chances on May 21.

He stated, “It’s not about politics.” “It’s not about me,” she says.

On Mr Morrison’s watch, a “full-blown cost of living crisis” has evolved, according to Labor.

The hike will be around A$80 per month for someone paying down a A$600,000 (£340,000; $426,000) mortgage, which is about normal for an owner-occupier in Australia.