Australia raises cash rate to 4.6%, highest in 15 years

September 29, 2026 at 09:56 AM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Australia's central bank raised its policy rate to 4.6% on Tuesday, the highest level in 15 years, to contain inflation stoked by the Middle East conflict. The 25-basis-point hike was in line with economists' expectations. The Reserve Bank of Australia said it would continue to do what is necessary to contain inflation, including raising rates further.

Key Facts

The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.6%, the highest level in 15 years.
The RBA has now raised rates four times this year by a total of 100 basis points.
Australia's inflation hit a high of 4.6% in March and came in at 3.5% in July, above the central bank's 2%-3% target band.
The S&P/ASX 200 and the Australian dollar were flat following the policy decision.

Rate Decision

The Reserve Bank of Australia raised its policy rate to 4.6% on Tuesday, the highest level in 15 years. The 25-basis-point increase to the cash rate matched expectations of economists polled by Reuters. The RBA has now raised rates four times this year by a total of 100 basis points as inflation remains sticky. The central bank said it would continue to do what it considers necessary to contain inflation, including increasing the policy rate further.

Inflation Pressures

The RBA said some of the upside risks flagged in its August meeting were now materializing. The central bank wrote that the conflict in the Middle East has broadened and global energy prices are now much higher than had been assumed. AI-related demand was driving rapid price increases for technology-related goods, the RBA added. Australia's inflation has run above its target band of 2%-3% for 2026, hitting a high of 4.6% in March and coming in at 3.5% in July. A Bank of America note last week said inflation was accelerating rather than converging back to target, with July CPI the clearest evidence of this shift.

Economic Outlook

The RBA 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. The central bank wrote that the Middle East conflict remains unresolved, and there are scenarios where inflation is higher and activity lower than forecast. The S&P/ASX 200 and the Australian dollar were flat following the policy decision.