Australia's central bank raises cash rate to 15-year high

The Reserve Bank of Australia (RBA) has increased its cash rate target by 25 basis points to 4.6%, the highest level in 15 years. The decision is aimed at curbing persistent inflationary pressures, with the central bank targeting inflation to stay within the 2-3% range. This marks the RBA's fourth rate hike this year, resulting in a total increase of one percentage point in borrowing costs for 2026.

Despite the rate hike, inflation remains at 3.6%, above the central bank's target. The higher borrowing costs will be particularly challenging for households with large mortgages. On the positive side, savers with high-interest deposit accounts may see increased returns if banks pass on the RBA's rate increase by raising deposit rates.