RBA Hikes Interest Rates to Highest Level Since 2011 Amid Inflation Concerns

The Reserve Bank of Australia (RBA) has increased interest rates to their highest level since 2011, reaching 4.6 per cent. This decision was made in a unanimous vote by the central bank's board and follows weeks of expectations for another rate hike.

The RBA noted that inflation is still too high and that further tightening of financial conditions is necessary to support a return to target in a reasonable period. This move may cause pain for already cash-strapped borrowers, with the average owner-occupier variable mortgage rate expected to rise to 6.49 per cent.

KPMG chief economist Brendan Rynne stated that the RBA had no choice but to raise the cash rate due to higher bond yields and global demand for savings. Dr Rynne predicted another rate hike in November, but noted that the chance of a third increase is less than 50 per cent.