RBA Lifts Cash Rate to 15-Year High Amid Persistent Inflation Concerns

The Reserve Bank of Australia (RBA) has raised the cash rate to its highest level in 15 years, at 4.6% amid persistent inflation. This marks the fourth interest rate hike this year and is part of the central bank's effort to cool down the economy.

According to Governor Michele Bullock, the RBA hopes that the current rate will be restrictive enough to reduce demand, but acknowledges that it's difficult to forecast economic outcomes.

The cash rate has increased by 25 basis points, from 4.35% to 4.6%, and is expected to have a significant impact on mortgage holders, with analysts estimating that monthly repayments for average households will increase by hundreds of dollars.

Stubborn inflation, hovering around 3.5% for six consecutive months, remains a major concern for the RBA, which has identified three external and domestic risks contributing to this issue: the prolonged conflict in the Middle East disrupting global supply chains and fuel prices, and a tight labor market supporting wage growth.