RBA interest rates: Reserve Bank hikes cash rate to 4.6%, the highest level since 2011

The Reserve Bank of Australia (RBA) has raised its key interest rate to 4.6%, the highest level since 2011, in a widely anticipated decision. This marks the fourth consecutive increase this year and is expected to have a significant impact on mortgage holders nationwide. The decision follows data to be released on Wednesday, which is anticipated to show underlying inflation rising at an annual pace of 3.6% for the third consecutive month in August, surpassing the RBA's target range of 2% to 3%.

RBA Governor Michele Bullock has warned that workers and businesses may raise their price and wage demands as they start to expect persistent high inflation. Treasurer Jim Chalmers attributed the inflation to the US war on Iran, rather than government spending, in an interview with Channel Seven. Before the decision, markets had predicted another hike by February and over a 50% chance of another by mid-2027. RBA Governor Bullock will provide further explanation for the decision at 3.30pm AEST in Sydney.