Reserve Bank of Australia Raises Interest Rate to 18-Year High Amid Persistent Inflation

The Reserve Bank of Australia (RBA) has increased its key interest rate by 0.25 percentage points to 4.85%, marking the fifth hike in 2026 and reaching an 18-year high. The decision, made by a 6-3 majority, was driven by persistent inflation pressures, partly attributed to higher fuel and commodity prices stemming from the ongoing conflict in the Middle East. The RBA forecasts inflation to remain elevated through much of 2027, not returning to its 2-3% target range until late 2027.