US EditionAustralia raises rates for first time since late 2023 as inflation hits six-quarter high
The Reserve Bank of Australia raised its cash rate by 25 basis points to 3.85%, citing persistent inflation and signaling potential further increases, impacting over 1.2 million mortgage holders.
- On Tuesday, the Reserve Bank of Australia monetary policy board raised the official cash rate by 0.25 percentage points to 3.85 per cent at its first 2026 meeting in Sydney.
- New inflation readings indicated the headline CPI rose 3.8% to December, with the Reserve Bank analysis noting private demand and capacity pressures drove the rate hike.
- Regional examples indicate that mortgage payments could increase by around $90 for a $600,000 loan if banks pass on the rate hike, affecting mortgage holders in Ballarat, Bendigo, Warrnambool, Newcastle, and Canberra.
- Markets had priced a 70 per cent chance of a rate hike, increasing pressure on Jim Chalmers, who said `It won't be the only influence... inflation will be a major focus`, Mr Chalmers told ABC Radio National.
- The board also warned that further increases are possible and said it will assess incoming data on a meeting-by-meeting basis.
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80 Articles
Australia reverses course with interest rate hike
Australia's central bank was forced to reverse course and raise interest rates today as it struggles to bring inflation under control in a supply-constrained economy, leaving markets wagering further hikes would be needed this year.
The dollar held broadly steady on Tuesday as positive economic data and shifting expectations for Federal Reserve policy outweighed concerns about another U.S. government shutdown.
Associated Press News
Australia's central bank raises interest rate to 3.85% after 3 cuts
Australia’s central bank has lifted its benchmark interest rate by a quarter percentage point to 3.85%, after three rate cuts last year and as inflation surges.
Australia Becomes First Major Economy to Hike Rates This Year
(Bloomberg) — Australia’s central bank raised its key interest rate Tuesday, the first major monetary authority to hike this year, after judging inflation pressures were persistent enough to warrant renewed restraint.
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