Australia Raises Interest Rates to Highest Level in 18 Years

2026, November 3

Australia

The Reserve Bank of Australia raised its benchmark cash interest rate by 0.25 percentage points to 4.85%, its highest level since the 2008 global financial crisis. It is the fifth increase in 2026, reflecting persistent inflationary pressures. The decision was approved by six members of the nine-member board, with three voting against the increase. Underlying inflation remains elevated, while unemployment has climbed to 4.7%. Reuters

Governor Michele Bullock indicated that further increases are not guaranteed, with the closely divided decision suggesting policymakers may be approaching the end of the tightening cycle. Nevertheless, the higher borrowing costs will put additional pressure on households and businesses, particularly mortgage holders. The bank expects inflation to remain above its target range for longer than previously anticipated, creating a difficult balance between controlling prices and supporting economic growth.