Australia raises interest rate to 15-year high

Australia’s central bank has raised its key interest rate to 4.60%, taking borrowing costs to their highest level in 15 years as policymakers seek to bring inflation under control.

The Reserve Bank of Australia (RBA) increased the cash rate by 25 basis points on Tuesday following its September policy meeting. The decision was unanimous and marked the fourth rate increase this year.

The latest move brings the total increase in interest rates during 2026 to one percentage point. The central bank said inflation remained above its desired level and warned that some risks pushing prices higher were becoming more significant.

The RBA pointed to elevated energy costs and weak productivity as factors contributing to inflationary pressure in the Australian economy. The bank said it would remain prepared to raise interest rates further if necessary to ensure inflation returns to a sustainable level.

The higher rates are expected to increase borrowing costs for households and businesses, while potentially slowing spending and investment. Policymakers are closely monitoring economic activity as they assess the impact of previous rate increases.