Reserve Bank Raises Cash Rate to 4.6%, Highest Level Since 2011

The Reserve Bank of Australia has raised its key interest rate to 4.6%, marking the highest level since 2011, up from 4.35%.

This widely anticipated fourth rate hike for the year will increase repayment costs for millions of mortgage holders nationwide.

Upcoming data released on Wednesday is expected to show underlying inflation climbing at an annual rate of 3.6% for the third consecutive month in August, significantly above the RBA’s target range of 2% to 3%.

RBA Governor Michele Bullock has warned that workers and businesses might increase prices and wage demands as they begin to anticipate persistently high inflation.

Treasurer Jim Chalmers stated that the conflict in the Middle East, rather than government spending, is to blame for inflation, speaking to Channel Seven on Tuesday morning.

“When you observe the impact on global oil prices and the re-escalation of the war in the Middle East, it is clear that this is a major driver of inflation,” Chalmers said.

Prior to the decision, markets predicted a further rate hike by February, with over a 50% probability of another increase by mid-2027.

Bullock is scheduled to speak at 3:30 pm AEST in Sydney to provide an explanation for the decision.

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