08 · Economy · Sydney
Australia Raises Rates to Highest Since 2008
Australia's central bank raised its cash rate a quarter point to 4.85%, its highest level since 2008, in a six-to-three vote, citing fuel prices pushed up by the Middle East conflict and investment tied to artificial intelligence.
In one minute
The Reserve Bank of Australia's Monetary Policy Board lifted the cash rate target by 25 basis points to 4.85%, its fifth increase this year and the highest level since 2008. The vote was split: six members backed the rise and three voted to hold the rate at 4.60%. The bank said inflation remains high and broad-based, partly because of higher fuel and commodity prices tied to the conflict in the Middle East, and that AI-related investment is driving rapid price growth for technology goods, with data-centre spending lifting business investment. It now expects inflation to stay above 3% for the coming year. The board said the inflation outlook had been revised materially higher, with an increasing risk that higher inflation expectations become embedded. It also said the economy is slowing, house prices have fallen significantly and unemployment has risen, and that it will do what it considers necessary to return inflation to its 2–3% target.
The board said in its statement that the inflation outlook had been revised materially higher and that there is an increasing risk higher inflation expectations will become embedded. It said the economy is slowing, house prices have fallen significantly and unemployment has risen, and that it will continue to do what it considers necessary to bring inflation back to its 2–3% target.
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