RBA Slams Brakes on Australian Economy with Fourth Cash Rate Hike

The Reserve Bank of Australia (RBA) has raised the cash rate to its highest level since November 2011, hiking it by 25 basis points to 4.6 per cent on September 29.

This is the fourth time this year that the RBA has increased the cash rate, following hikes in June and August. The decision was widely anticipated, with economists and forecasters expecting another rise due to persistent inflation above target.

The consumer price index (CPI), which measures inflation in the Australian economy, came down to 3.5 per cent in August, but not as much as the RBA had predicted. Despite this, RBA Governor Michelle Bullock has made it clear that another hike was necessary to slow demand and bring inflation back into line with supply.

The unemployment rate is now at its highest since the COVID-19 pandemic, at 4.6 per cent, but still within the range of 4.5 to 5 per cent that Bullock considers necessary to reduce inflation.