Australia's central bank lifts rates to 15-year high, cannot rule out more hikes
TLT•The Reserve Bank of Australia unanimously raised its cash rate by 25 basis points to 4.6%, its highest level in 15 years, and said it could raise rates further if needed.
1. Rate rises to 4.6%
The Reserve Bank of Australia raised its cash rate by 25 basis points on Tuesday, its fourth increase this year, bringing the total tightening in 2026 to 100 basis points. The board said some inflation risks had materialised and it would increase the rate further if needed to bring inflation sustainably back to target.
2. Inflation risks persist
Governor Michele Bullock said the board considered holding rates steady and was assessing the effects of its increases so far. Inflation was forecast to return to 4.1% in August, above the RBA's 2% to 3% target band, while underlying inflation was expected to remain at 3.6%. The RBA cited recent data showing growth and inflation higher than expected, as well as further disruptions to global oil supply.
3. Economy and rate outlook
Australia's economy grew 2.1% annually in the second quarter, above the RBA's 2% sustainable-growth estimate. Household spending was flat in August, while annual spending growth was 6.8%; the jobless rate edged up to 4.6%. Markets implied a 33% probability of a November rate increase and were almost fully pricing in a rise by February.
