Australia raises key rate to 4.85% — CNBC

The Reserve Bank of Australia raised its key interest rate by 25 basis points to 4.85%. This is the highest level since November 2008. The decision marked the country’s fifth rate increase since the beginning of the year, CNBC reports.

The increase met forecasts

The Australian central bank’s decision matched the expectations of economists surveyed by Reuters. The regulator is tightening monetary policy amid accelerating inflation: the consumer price index rose by 4.3% year-on-year in September, following 4% in August. This was the highest reading since March.

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Inflation and economic slowdown

In September, Reserve Bank of Australia Governor Michele Bullock said inflation was “too high.” According to her, it was affected by higher oil prices due to the war in Iran and stronger domestic demand. She also said the regulator could continue raising the rate if necessary to bring inflation down.

Australia’s economic growth slowed in the first two quarters of 2026. Gross domestic product grew by 2.1% in the June quarter compared with the same period a year earlier, while the figure was 2.5% in the March quarter. Bullock noted that a recession is not currently the baseline scenario for the country.