RBA Slams Brakes on Inflation with Record-Breaking Rate Hike

The Reserve Bank of Australia (RBA) has raised interest rates to a 15-year high of 4.6 per cent in an effort to combat stubborn inflation.

In a unanimous decision, the RBA's monetary policy board increased the benchmark cash rate by 0.25 of a percentage point on Tuesday, adding over $90 a month to repayments on a typical $600,000 mortgage with 25 years remaining.

The increase means Australia now has one of the highest official interest rates set by a central bank among western economies, surpassing the US and UK.

RBA governor Michele Bullock warned last week that the jobless rate may need to rise as high as 5 per cent to ease pressure on inflation, while acknowledging the housing downturn and weak productivity growth.

Price pressures have been stoked by elevated fuel prices caused by the Middle East conflict, which has dragged on since February and continues to disrupt global oil supplies.