Reserve Bank of Australia raises rates to 4.85% to fight inflation

Summarised from 2 outlets · 3 reports · Updated 3 Nov, 04:03 · Archive

Australia's central bank raised its cash rate by 25 basis points to 4.85%, its fifth increase this year and highest since 2008.

Australia's central bank raised its cash rate to 4.85% on Tuesday, marking its fifth hike this year and the highest level since November 2008. The decision was split among the monetary policy board, with six members voting for the increase and three preferring to hold rates steady.

The RBA is attempting to combat surging inflation, which reached 4.3% in September, up from 4% in August. The central bank cited a global oil shock triggered by the war in the Middle East, along with factors including artificial intelligence-related investment driving rapid growth in technology prices, as contributors to the elevated inflation. The RBA now expects inflation to remain elevated through much of 2027, with the consumer price index not expected to return to its 2–3% target range until late 2027, three quarters later than previously forecast.

The hike will increase borrowing costs for mortgage holders. The latest rise will lift monthly interest payments on a £700,000 home loan by £107, according to Canstar, bringing the total increase in repayments over this year's five hikes to £532. Over 3.3 million households with home loans will be affected by the decision.

In its post-meeting statement, the board said it 'will continue to do what it considers necessary to bring inflation sustainably back to target', but did not explicitly reference further hikes, signalling the RBA is prepared to pause and assess the effects of this year's rises. Australia's GDP rose 2.1% in the June quarter compared to a year earlier, down from 2.5% in the March quarter.

How it is being reported

• Australia hikes rates to 18-year high to fight inflationThe Reserve Bank of Australia's decision was in line with expectations from economists polled by Reuters, and marked its fifth rate increase this year.CNBC · 3 Nov, 03:46
• RBA interest rates: Reserve Bank hikes cash rate for fifth time this year in blow to mortgage holdersReserve Bank of Australia increases official cash rate to 4.85%, bringing it to highest level since 2008 RBA interest rates live updates: Reserve Bank cash rate decision Get our daily political email , free app or daily news podcast The Reserve Bank has hiked rates for the fifth time this year, from 4.6% to 4.85%, in an attempt to regain control of surging inflation amid an ongoing global oil shock triggered by the war in the Middle East. The RBA’s decision to hit mortgage holders again is no surprise after inflation jumped to 4.3% in the year to September and comes following tough talk from…Guardian World · 3 Nov, 03:30
• RBA interest rates live: Reserve Bank of Australia meeting today before cash rate decision and announcement – latest newsReserve Bank is expected to raise interest rates to an 18-year high on Tuesday, the fifth hike this year Get our breaking news email , free app or daily news podcast Asked why Labor can’t guarantee it won’t find net savings in the mid-year budget update, Chalmers told RN the government is undertaking that task this month ahead of December’s release. We are currently working our way through the spending pressures, the economic forecasts, and the savings options to come up with the best, most responsible budget update that we can. There have been savings in all eight of our budget updates so…Guardian World · 3 Nov, 01:39

In this story: Reserve Bank of Australia · Australia · Middle East

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