SYDNEY, September 29, 2026 (DAILYNWZ) — Australia’s central bank raised its cash rate to a 15-year high of 4.60% on Tuesday, its fourth increase this year, warning that inflation remains too high and leaving the door open to further hikes if needed.
The Reserve Bank of Australia’s board unanimously approved a 25-basis-point increase at its September meeting, taking the total tightening this year to a full percentage point.
The move comes as underlying inflation remains above the bank’s target and risks to the price outlook are becoming more pronounced. Core inflation was running at 3.6%, above the RBA’s 2%-3% target range, while the bank said high energy costs and weak productivity were adding to inflation pressures.
“Some of the upside risks to inflation are materialising,” the RBA said, pointing to elevated energy costs and weak productivity in the domestic economy.
The decision had been widely expected by financial markets, which had already priced in a substantial chance of another increase after the latest inflation data. Markets are now pricing in at least one further rate hike.
The latest move marks a sharp shift in the RBA’s policy path after rates had been lowered earlier in the cycle. The bank’s decision underscores its concern that price pressures could prove more persistent than previously anticipated.
Energy costs have remained a key source of pressure, while weak productivity can make it harder for businesses to absorb higher costs without passing them on to consumers. The RBA’s assessment suggests the inflation challenge is no longer confined to temporary price shocks.
The central bank did not commit to a specific number of additional increases, but said it remained prepared to raise rates further if necessary.
The rate now stands at its highest level in 15 years, increasing borrowing costs for households and businesses as the central bank seeks to bring inflation back within its target range.
Investors will now focus on incoming inflation, activity and productivity data for clues about how far the RBA may need to tighten policy.