The Reserve Bank of Australia (RBA) unanimously raised the cash rate target by 25 basis points to 4.60% on 29 September, judging further tightening warranted because inflation remained too high and upside risks were materialising even as the economy appeared to be slowing. Over the past year, the RBA held the rate at 3.60% through December 2025, raised it by 25 basis points in February, March and May 2026 to 4.35%, and held it in June and August. Recent inflation outcomes were stronger than expected, short-term inflation expectations remained elevated and firms reported cost pressures and plans to raise prices. Output growth slowed but was marginally stronger than expected in the June quarter, while business investment and debt growth remained strong. The broadened Middle East conflict and oil supply disruptions are lifting energy prices, while artificial intelligence-related demand is driving rapid growth in technology-goods prices, although growth among Australia’s major trading partners has been stronger than expected. The RBA said aggregate demand growth must remain subdued for a period and signalled it would raise the cash rate further if needed, guided by incoming data and evolving risks.
Source: 2026-09-29Reserve Bank of Australia
Reserve Bank of Australia Raises Cash Rate by 25 Basis Points to 4.60%
The Reserve Bank of Australia unanimously raised the cash rate target by 25 basis points to 4.60% on 29 September, citing persistently high inflation and materialising upside risks despite signs of slowing growth. It signalled further tightening if needed, guided by incoming data and evolving risks.