Australia's central bank raises interest rates for 1st time since 2023
Australia’s central bank increased its key interest rate on Tuesday for the first time since November 2023, citing signs that inflation is beginning to rise again.
The Reserve Bank of Australia lifted the cash rate by 25 basis points to 3.85 percent, reversing a long pause in its tightening cycle.
Inflation has fallen significantly from its peak of nearly eight percent in December 2022, but recent government data suggest price pressures are building once more. The central bank’s monetary policy board said inflation is likely to remain above its target for some time.
“While inflation has fallen substantially since its peak in 2022, it picked up materially in the second half of 2025,” the board said in a statement accompanying the decision.
The rate hike comes as many Australian households continue to struggle with high living costs, particularly for essentials such as food and fuel, as well as persistently elevated housing expenses.
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