RBA Hikes Cash Rate for Fourth Time This Year

The Reserve Bank of Australia (RBA) has raised the cash rate for the fourth time this year, taking it to its highest level since November 2011. The decision was announced on September 29, with a 25 basis point increase bringing the rate to 4.6 per cent.

This move follows hikes in August and June, with Governor Michelle Bullock reiterating that another rise was necessary if inflation continued above target. Despite a slight drop in the consumer price index (CPI) to 3.5 per cent in August, it was not as much as predicted, leading forecasters to suggest another lift could be expected before the end of the year.

Unemployment figures have been higher than expected, with Ms Bullock stating that this would be a necessary evil of tightening monetary policy. At 4.6 per cent, the current unemployment rate is the highest since the COVID-19 pandemic, but still within the range of 4.5 to 5 per cent considered necessary to reduce inflation.

Major banks had changed their predictions to include an increase at the August meeting, with ANZ and NAB both agreeing that the risk was high.