The Reserve Bank of Australia lifted its key interest rate to 4.6%, the highest level since 2011, in a widely expected move. The decision aims to combat inflation, which is running ahead of the RBA's target range.
The RBA's decision to raise interest rates to a 12-year high directly impacts mortgage holders and businesses by increasing borrowing costs, potentially slowing economic activity as it aims to curb persistent inflation.
The Reserve Bank of Australia has raised its key interest rate to 4.6%, marking the highest level since 2011. This move, the fourth increase this year, is expected to increase repayment costs for mortgage holders. Underlying inflation is projected to remain at 3.6% annually for August, significantly above the RBA's target range of 2% to 3%. RBA Governor Michele Bullock has cautioned that persistent high inflation could lead to increased price and wage demands from workers and businesses. Treasurer Jim Chalmers attributed current inflation primarily to global oil prices and the conflict in the Middle East, rather than government spending. Prior to the decision, market predictions indicated a further rate hike by February and a greater than 50% chance of another by mid-2027. Bullock is scheduled to address the decision at 3:30 p.m. AEST in Sydney.
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