RBA Hikes Cash Rate Amid Elevated Inflation Concerns

The Reserve Bank of Australia (RBA) has increased the cash rate target by 25 basis points to 4.60 per cent in response to stronger than expected inflation data.

In its announcement, the RBA stated that inflation remained elevated and some upside risks flagged in August were now materializing.

The bank cited the conflict in the Middle East and global energy prices as contributing factors to the increased inflation, with technology-related goods also seeing rapid growth due to AI-driven demand.

Short-term measures of inflation expectations remain elevated, and recent inflation outcomes in Australia were stronger than expected at the previous meeting.

AMP chief economist Shane Oliver said it may now take longer to return to the underlying inflation target than the RBA forecast in August, while University of Sydney professor James Morley predicted that the central bank is likely to raise rates at the next meeting unless future data eases its concerns about inflation.