Rates Rise As Predicted

The Reserve Bank of Australia (RBA) has increased interest rates to their highest level in 15 years.

Declaring that inflation remains elevated, it increased the rate by 25 basis points to 4.6%.

According to the RBA the conflict in the Middle East has broadened and global energy prices are now much higher than had been assumed in the August forecasts, resulting in higher inflation.

It says even though the economy does appear to be slowing, inflation is still too high.

“The Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed,” it says.

A rise in interest rates had appeared a near certainty when the consumer price index (CPI) rose 3.5% in the 12 months to July 2026 and August unemployment figures came in at 4.6% – the highest level in almost five years.

A 25-basis point increase in interest rates can reduce borrowing capacity by about $11,200, based on Australia’s average full-time income.

It is the fourth rate rise in 2026. The RBA will next meet again on November 3, 2026.

Commonwealth Bank head of Australian economics Belinda Allen says the increase adds roughly $91 per month to repayments on a $600,000 variable-rate loan with 25 years remaining.