RBA Hikes Cash Rate to 15-Year High Amid Energy Price Pressures

The Reserve Bank of Australia (RBA) has increased the cash rate by 25 basis points to 4.6%, marking its highest level in 15 years, as policymakers respond to renewed inflation pressures from energy, housing, and weak productivity.

The RBA's decision, announced on Tuesday, was unanimous and came after the central bank warned that some of the identified inflation risks were materializing.

The board emphasized its focus on preventing high inflation from becoming embedded, citing sharply higher global energy prices, elevated short-term inflation expectations, and recent domestic inflation readings that were stronger than expected.

Household spending growth slowed in August, coming in below market expectations, while consumers are already feeling the pressure of higher mortgage repayments and reduced borrowing power.