RBA Lifts Cash Rate to 4.6%, Highest Since 2011

The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.6%, the highest level since 2011. The central bank's nine-member board voted unanimously, marking the fourth hike of 2026. The RBA said it is prepared to tighten policy further if needed to return inflation sustainably to target. It pointed to global energy prices running well above the levels assumed in its August forecasts, and said AI-related demand is lifting global prices for technology goods. The bank also noted that higher fuel costs have partly flowed through to other goods and services. Australian Bureau of Statistics figures showed headline inflation hit 4.6% in March after fuel prices jumped 32.8% in a single month. Headline inflation then eased to 3.5% by July, helped by an April change that halved the fuel excise. The trimmed mean measure of underlying inflation rose from 3.3% in March to 3.6% in July and has held at 3.6% since May, still above the RBA's 2% to 3% target band. Other major central banks also adjusted policy in September. The US Federal Reserve lifted its target range by 25 basis points to 3.75% to 4% on September 16, its first increase since 2023. The European Central Bank raised its deposit rate to 2.5% days earlier. The Bank of Japan increased its policy rate to 1.25% on September 18, the highest since 1995. The Bank of England held its rate at 3.75% on September 17, with three of nine policymakers voting for an increase. In Australia, GDP growth slowed to 2.1% in the year to the June quarter from 2.5% in the March quarter. The RBA said housing prices have fallen in most capital cities. Bloomberg reported the unemployment rate rose to 4.6% in August. Interest-rate swaps were pricing a 56% chance of another increase in November, up from about 50% before the decision. The ABS is scheduled to release August inflation data on Wednesday, and to publish September figures—including quarterly readings—on October 28, ahead of the RBA's November meeting.