RBA Set to Raise Interest Rates Again Amid Inflation Fears

The Reserve Bank of Australia (RBA) is set to increase interest rates for the fourth time in just over six months, despite a budget bright spot that's expected to deliver a pleasing report card. Economists are warning mortgage holders to brace for another rate hike, with borrowing costs likely to tick up to 4.6% - their highest in 15 years.

On spending, the actual outcomes of the 2025/26 budget are forecast to deliver a deficit that's billions of dollars better than Canberra expected in May. The government is painting conflict in the Middle East as the primary driver of inflation, with Deputy Prime Minister Richard Marles saying Australia is better able than most to weather economic storms.

The RBA's decision comes as soaring fuel prices are expected to push headline inflation from 3.5% to four per cent by the time the Australian Bureau of Statistics reports on Wednesday. The US, Europe and Japan have all hiked interest rates due to rising fuel prices since the RBA met in August.