Australia’s RBA Raises Rate to 18-Year High Amid AI Price Pressures

The Reserve Bank of Australia raised its cash rate target to 4.85%, an 18-year high, citing persistent inflation pressures that include AI-linked technology costs, whose effect on consumer prices remains modest.

The 25-basis-point (0.25 percentage point) increase lifted the target from 4.60%. The Monetary Policy Board voted 6-3, with three members favoring no change. The RBA announced the decision at 10:30 p.m. ET Nov. 2 (03:30 UTC Nov. 3).

The RBA cited fuel and commodity costs, domestic capacity pressures and rapid price increases for technology goods tied to AI investment. Its November outlook described AI-related cost pressures as having had only a modest effect on consumer prices so far. Australia’s consumer price index rose 4.3% in the year through September, while trimmed-mean inflation, which filters out some price swings, reached 3.6%.

The RBA projects headline inflation at 2.7% for the year through December 2027 and a return to its 2.5% midpoint around mid-2028. Its target range is 2% to 3%. The bank also noted that most advanced-economy central banks have raised rates or are expected to, adding to a global backdrop of tighter monetary policy.