Australia raises benchmark interest rate to 15-year high

Australia’s central bank raised its benchmark interest rate by 0.25 percentage points to 4.6 percent on Tuesday, the highest level since 2011, as policymakers responded to persistent inflation.

The Reserve Bank of Australia said inflation remained elevated and previously identified upside risks had materialised. These included higher energy prices linked to the United States-Israel war on Iran and rising technology costs driven by artificial intelligence.

Australia’s annual inflation rate was 3.5 percent in July, above the RBA’s target range of 2 to 3 percent. The bank said global oil-supply disruptions were adding pressure to domestic and international energy prices, while uncertainty surrounding the Middle East conflict could result in higher inflation and weaker economic activity than forecast.

The increase, the fourth this year, is expected to raise mortgage payments for millions of households. Research firm Roy Morgan estimated that nearly 1.8 million mortgage holders—almost one-third of the total—were at risk of mortgage stress in July, meaning they spent 25 to 45 percent of after-tax income on repayments.

Treasurer Jim Chalmers said the decision would make conditions harder for Australians already under financial pressure. He said the government would continue managing the budget, delivering tax cuts and cost-of-living assistance, and addressing longer-term economic challenges.