Australia Raises Benchmark Rate to 15-Year High at 4.6%
The Reserve Bank of Australia delivered its fourth increase this year as inflation remains above its 2%-3% target band.
Australia’s central bank raised its benchmark interest rate to 4.6% on Tuesday, the highest level in 15 years, adding to global monetary-tightening pressure watched by crypto and risk-asset traders.
The Reserve Bank of Australia increased the rate by 25 basis points, bringing its total rate increases this year to 100 basis points across four decisions. The move comes as inflation remains above the bank’s 2%-3% target range.
Consumer-price growth reached 3.5% in July after hitting 4.6% in March. August inflation data is scheduled for release Wednesday.
The bank has identified domestic price pressures and higher energy costs linked to the Iran war as drivers of persistent inflation. It has also warned that higher rates may slow economic growth. Australia’s economy expanded at an annual rate of 2.1% in the second quarter, down from 2.5% in the first three months of the year.
The rate decision raises the cost of borrowing in Australia as policymakers try to prevent inflation from becoming entrenched. The next immediate data point for markets is the August inflation report due Sept. 30.
