RBA Hikes Cash Rate to 15-Year High Amid Inflation Concerns

The Reserve Bank of Australia (RBA) has announced its decision to raise the cash rate for the fourth time this year, increasing it by 25 basis points to 4.6 per cent on September 29.

This move brings the cash rate to its highest level since November 2011 and follows hikes in June and August. Reserve Bank Governor Michelle Bullock had previously stated that another rise was possible if inflation remained above target, which it did at 3.5 per cent in August.

The RBA's decision comes as unemployment remains high, with the number of Australians looking for work reaching its highest level since the COVID-19 pandemic. While still within the desired range of 4.5 to 5 per cent, this has been seen as a necessary evil in tightening monetary policy to reduce inflation.

Major banks had already begun predicting another rate hike, with ANZ and NAB agreeing that an increase was likely by November. In her comments earlier this month, Governor Bullock stated that the RBA aims to set the cash rate at a level that would slow demand enough to bring it back in line with supply.