RBA Hikes Cash Rate Again Amid Ongoing Inflation Concerns

The Reserve Bank of Australia (RBA) has delivered a hawkish 25-basis-point hike, raising its cash rate to 4.60%. In a unanimous decision, the Board signaled that policy will remain restrictive for longer and additional tightening cannot be ruled out.

RBA Governor Michele Bullock stressed in her press conference that labour market conditions are too tight to be consistent with the inflation target, while demand pressures continue to exceed supply capacity. The renewed escalation in Middle East tensions was also highlighted as an additional source of inflation uncertainty.

The RBA pushed back against suggestions that Australia is facing stagflation, noting that current inflation around 3.5% and unemployment at 4.6% do not constitute a stagflationary environment. Inflation has shown limited progress in recent months and remains above target, with weak productivity growth identified as a key challenge.