RBA Hikes Interest Rates to 15-Year High Amid Inflation Fears

The Reserve Bank of Australia (RBA) has raised interest rates to a 15-year high, with the cash rate target increasing by 25 basis points to 4.6%. This decision was made in an effort to combat inflation, which RBA governor Michele Bullock stated is still too high.

The move was widely anticipated by financial markets and economists, who had predicted a fourth rate hike since February. However, analysts are divided on whether the RBA will continue to raise interest rates, with some predicting another hike in November or early next year.

RBA governor Michele Bullock emphasized that the central bank's focus is on getting inflation back down to target, and that financial conditions are already restrictive. She also acknowledged that a recession is not currently the bank's central forecast, but noted that it might be necessary if inflation expectations get out of control.

The decision comes as household spending growth was flat in August, according to recent data from the Australian Bureau of Statistics. However, consumers remain on a strong footing, with annual household spending up 6.8%. The RBA's move is also in line with rate hikes by central banks in other countries, including the US and Europe.