The Australia/">Reserve Bank of Australia raised its benchmark cash rate by 25 basis points to 4.85% on Tuesday, taking it to its highest level since November 2008. The move was in line with expectations among economists surveyed by Reuters and was the bank’s fifth rate increase this year.
The decision was split: six members of the RBA’s board voted for the increase, while three favored leaving rates unchanged. The bank said inflation is expected to remain elevated through much of 2027 and is not forecast to return to its 2%–3% target range until late that year, three quarters later than previously projected.
Australia’s consumer price index rose 4.3% in September, up from 4% in August and its highest reading since March. The RBA attributed the inflation outlook to higher fuel and other commodity prices, as well as factors including AI-related investment driving up prices for technology goods.
Economic growth has also slowed. GDP increased 2.1% year on year in the June quarter, compared with 2.5% in the March quarter. The RBA is seeking to curb inflation as higher borrowing costs and living expenses weigh on households and economic activity.
Sources: CNBC Markets.