Australia Raises Benchmark Rate to 15-Year High Amid Sticky Inflation

Australia's central bank raised its benchmark interest rate to a 15-year high on Tuesday in an effort to combat sticky inflation. The Reserve Bank of Australia (RBA) increased the key rate by 25 basis points, bringing it to 4.6%, as it aims to contain price growth that has been driven by domestic pressures and higher energy costs due to the Middle East conflict.

The RBA has now raised rates four times this year for a total of 100 basis points, with inflation remaining above its target band of 2-3% for 2026. The country's inflation rate peaked at 4.6% in March and stood at 3.5% in July, beating estimates.

The bank warned that the economy may experience a growth slowdown due to the rate increases, with Australia's GDP growing at 2.1% in the second quarter, down from 2.5% in the first three months of the year.