Australia hikes rates to 18-year high to fight inflation

The Reserve Bank of Australia's decision was in line with expectations from economists polled by Reuters, and marked its fifth rate increase this year.

Australia hikes rates to 18-year high to fight inflation

TL;DR

  • Australia's central bank raised its benchmark cash rate by 25 basis points to 4.85%.
  • This is the highest level since November 2008 and marks the fifth rate increase this year.
  • Inflation is now projected to remain elevated through much of 2027, not expected to reach the 2%-3% target until late 2027.
  • Factors contributing to inflation include higher fuel and commodity prices, and AI-related investment driving up technology goods prices.
  • The decision was split, with six members voting for the increase and three for a hold.
  • GDP growth has slowed in the first two quarters of 2026.
  • A recession is not considered the base case by the RBA.