Australian central bank lifts key interest rate to 18-year high

The Reserve Bank of Australia increased its key interest rate to a 18-year peak on Tuesday, citing ongoing inflationary pressures and geopolitical unrest. In response to the prolonged conflict in the Middle East and persistent inflation, the bank raised its cash rate by 25 basis points to 4.85%. Inflation continues to be elevated, primarily due to surging fuel and commodity prices influenced by the regional turmoil.

The decision marks the fifth interest rate hike this year, exacerbating cost-of-living concerns for Australian households and raising mortgage payments to historically high levels. The Reserve Bank of Australia warned that uncertainties surrounding domestic economic activity and inflation persist, driven by global oil supply disruptions impacting energy prices and inflation worldwide.