Reserve Bank of Australia raises rates by 0.25% as inflationary pressures increase

Reserve Bank of Australia raised its interest rates by 25 basis points to 4.60%, in reaction to growing inflationary risks, following hotter than expected inflation readings in July and strong rise in oil prices and signaled readiness for further policy tightening.

The RBA board decision was unanimous and in line with market expectations, with comments from Governor Bullock pointing to the board’s hopes that current rate will be restrictive enough to curb inflation, after four rate hikes by total of one percent in nine months of 2026, that more than fully reversed three rate cuts in 2025.

Governor Bullock added that the RBA will continue to closely monitor the impact of higher interest rates on the economy.

Rise of oil prices of nearly 20% since the RBA last policy meeting in August fueled price pressures. Economists expect that higher oil prices have pushed headline inflation to 4.1% in August (data will be released on Wednesday), from 3.5% in July that moves inflation further away from central bank’s 2%-3% target band, with core inflation expected to remain elevated at 3.6%.