Australia’s central bank raised its interest rate by 25 basis points to 4.85%, its highest level in 18 years. The Reserve Bank of Australia’s board voted 6–3 for the increase; three members preferred to keep the rate at 4.60%.
The bank now forecasts inflation will return to the top of its 2% to 3% target range in late 2027, about three quarters later than it previously expected. The board said AI-related investment was driving up prices for technology goods, while higher fuel and commodity prices affected by the Middle East conflict were also adding pressure.
