RBA lifts interest rates to highest level since 2011 as inflation persists

(Sharecast News) - Australia's Reserve Bank on Tuesday lifted interest rates to their highest level in 15 years and warned more rises could be on the way if inflationary pressures persisted.

The RBA hiked its cash rate by 25 basis points to 4.6%, its fourth increase of 2026. The board said the decision was unanimous and signalled it was prepared to tighten policy further if needed to return inflation to target.

Consumer price inflation is currently 3.5%, above the RBA's 2-3% band. Policymakers said recent data had been stronger than expected and that financial conditions needed to remain restrictive to ensure price pressures ease over time.

Core inflation, which strips out volatile energy and food prices, was running at 3.6%.

The RBA's decision follows similar moves by the European Central Bank, US Federal Reserve, Bank of Japan and Reserve Bank of New Zealand/

Renewed hostilities between the US and Iran along with attacks on Saudi Red Sea oil facilities have also sent crude oil prices above $100 a barrel higher in recent weeks, increasing global inflation through higher energy costs.

"The three increases in the cash rate target since the beginning of the year have tightened financial conditions and the economy appears to be slowing," the RBA's board said in a statement.

"But inflation is still too high and the Board judged that, in light of recent developments, a further tightening in financial conditions is warranted to support a return of inflation to target in a reasonable period.

"The Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed," it said.

Reporting by Frank Prenesti for Sharecast.com