RBA Hits Borrowers with Highest Cash Rate in 15 Years

The Reserve Bank of Australia (RBA) has increased its official cash rate to 4.6 per cent, marking the highest borrowing costs in 15 years.

RBA Governor Michele Bullock warned that upside inflation risks are actively materializing, citing the global AI boom and escalating tensions in the Middle East as primary drivers of renewed price pressures in the Australian economy.

The central bank noted that inflation came in at 3.8 per cent for the June quarter, which remains stubbornly above its 2 to 3 per cent target band.

Bullock explained that the surge in global demand for AI infrastructure is driving significant price rises, particularly through increased energy consumption for data centers and the high cost of imported semiconductor hardware.