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Michele Bullock, governor of the Reserve Bank of Australia (RBA), attends a news conference at the bank's head office in Sydney, Australia, on Tuesday, Dec. 9, 2025. Australia's central bank kept its key interest rate unchanged for a third straight meeting in a widely expected decision, while reiterating that future moves will hinge on incoming economic data. Photographer: Brendon Thorne/Bloomberg via Getty Images
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Australia's central bank on Tuesday raised rates to 4.6%, their highest level in 15 years as the country looks to contain inflation stoked by the Middle East conflict.
The hike of 25 basis points was in line with expectations by economists polled by Reuters.
The Reserve Bank of Australia has now raised rates four times this year by a total 100 basis points as inflation remains sticky.
Australia's inflation has run above its target band of 2%-3% for 2026, hitting a high of 4.6% in March. The country's inflation rate last came in at 3.5% in July, beating estimates. August print is set to be released Wednesday.
In its last meeting, the RBA had said that "inflation is still too high," and was driven by domestic price pressures and higher energy prices due to the Iran war.
A note from Bank of America last week said inflation was accelerating rather than converging back to target. "The July CPI was the clearest evidence of this shift, adding to a pattern of rising core inflation in recent months."
There is also evidence of second-round effects from energy costs, reinforcing the risk that inflation is becoming entrenched, BofA said.
The RBA had warned of a growth slowdown in the country as rates rise, with Australia's economy growing at 2.1% in the second quarter, down from 2.5% in the first three months of the year.
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