RBA Slams Brakes Again: Interest Rates Hit 15-Year High Amid Middle East Conflict

Australia's central bank has raised its policy rate to 4.6%, the highest level in 15 years, to combat persistent inflation pressures exacerbated by the Middle East conflict.

The Reserve Bank of Australia (RBA) increased its interest rate by 25 basis points, matching market expectations and marking the fourth hike this year, totaling a 100-basis-point increase since January.

The RBA cited higher global energy prices linked to the ongoing conflict as a key factor contributing to inflation, which has remained above the bank's 2% to 3% target band in 2026. Despite recent easing to 3.5% in July, August inflation data is due on Wednesday.

Bank of America warned that inflation may be accelerating rather than returning to target levels, with signs of second-round effects from higher energy costs increasing the risk of entrenched inflation.