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RBA lifts interest rates to 4.35%; inflation risks rise
The Reserve Bank of Australia (RBA) has raised the cash rate by 25 basis points to 4.35%, citing mounting inflationary pressures and heightened global uncertainty linked to the ongoing conflict in the Middle East. The decision, announced on Tuesday, reflects concerns over rising fuel and commodity prices, alongside persistent domestic capacity constraints. The move was supported by a majority of policymakers, with eight members voting in favour of the increase, while one member opted to keep the rate unchanged at 4.1%. In its Statement on Monetary Policy, the central bank noted stronger-than-expected economic activity in late 2025, alongside ongoing tightness in the labour market and sustained capacity pressures. "GDP growth picked up strongly in the December quarter, as expected, to be above our estimates of its potential growth rate. Survey measures of capacity utilisation remained above average in February and March, suggesting that capacity pressures persisted into early 2026. "Private investment was stronger than anticipated in the December quarter while household consumption growth was weaker than expected. Recent spending data suggest that there was a little less underlying momentum in household consumption p
Interest rates
Fed holds rates steady as split deepens
The Federal Reserve held its benchmark interest rate unchanged on Wednesday (Thursday AEST), however, policymakers revealed an unusually high level of dissent amid growing divisions over how to respond to persistent inflation and an uncertain economic outlook. In what may mark Chair Jerome Powell’s final meeting leading the central bank, the Federal Open Market Committee voted 8-4 to keep the federal funds rate within a range of 3.5% to 3.75%. Financial markets had fully anticipated the decision, pricing in a near certainty that rates would remain unchanged. However, four officials dissented — the highest level of dissent since October 1992. Governor Stephen Miran again dissented in favour of a quarter-percentage-point rate cut, maintaining the position he has held since joining the Board in September 2025. In contrast, Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari, and Dallas Fed President Lorie Logan supported holding rates steady but opposed language in the official statement that suggested a potential easing bias. At the centre of the disagreement was a key sentence in the post-meeting FOMC statement: “In considering the extent and timing of additional adjustments to the target ra
Interest rates
RBA sees material enonomic effect of longer war
A longer conflict in the Middle East could have a material bearing on inflation and economic activity in Australia, according to the Minutes of the Reserve Bank of Australia’s March meeting. RBA Monetary Policy Committee members considered the implications for future decision of their split majority decision to raise the official cash interest rate by 25 basis points to 4.10% on 17 March. “They agreed that it was not possible to predict the future path for the cash rate target with any confidence, given the high degree of uncertainty around the breadth and duration of the current conflict in the Middle East,” the Minutes said. “A longer conflict could have a material bearing on both inflation and economic activity. Members therefore acknowledged that future policy decisions would require the Board to balance its two objectives carefully.” The board was split 5-4 in favour of an increase. Financial markets have rated the chances of another rate rise in May at 60%. “In finalising its statement, the Board agreed to remain attentive to the data and the evolving assessment of the outlook and risks when making its decisions,” it said. “The Board will remain focused on its mandate to deliver price stability and full
Interest rates
Inflation larger problem than unemployment: Goolsbee
Inflation is now a larger issue than unemployment for the United States economy, Chicago Federal Reserve President Austan Goolsbee said, with both interest rate cuts and hikes potentially on the table. The Federal Reserve’s decisions will also depend on the U.S. war against Iran, said Goolsbee. Goolsbee is not a voting Federal Open Market Committee member this year, but will vote again in 2027. “The most important thing is to figure out the through line of what is happening,” Goolsbee told CNBC. “What makes this a fraught but intense moment is nobody can tell us what is going to happen on the ground in the conflict in the Middle East, and how long that lasts.” A rate increase could be a possibility later in the year, Goolsbee said, in response to soaring oil prices or if inflation rises. This would be the U.S.’ first rate hike since July 2023. “We could be back to the environment with multiple rate cuts for the year, if inflation behaves. I could see circumstances where we would need to raise rates if it was going a different way and inflation was getting out of control.” The Federal Reserve held rates steady at its last meeting in March. Traders expect a 92.8% chance that rates will also remain unchanged in April,
Interest rates
Fed holds rates, flags Iran war uncertainty
The United States Federal Reserve has held its benchmark interest rate steady, as policymakers assess persistent inflation pressures, mixed labour market signals and the uncertain economic fallout from the war with Iran. In a widely anticipated move, the Federal Open Market Committee voted 11-1 to maintain the federal funds rate within a target range of 3.5%-3.75%. The benchmark rate influences borrowing costs across the economy, from consumer loans to business financing. In its post-meeting statement, the central bank made only minor adjustments to its economic outlook, projecting slightly stronger growth alongside higher inflation for 2026. Despite the elevated uncertainty, officials continued to signal that rate cuts remain likely over the coming years. The closely watched “dot plot” indicated expectations for one rate reduction this year and another in 2027, though the timing remains unclear. Of the 19 policymakers, seven now anticipate no rate changes this year, one more than in the previous update. The median projection suggests the federal funds rate will settle around 3.1% over the longer term.Credit: Federal ReserveA key source of uncertainty remains the ongoing conflict involving Iran, which has disrupt

Interest rates
Split RBA Board agreed on rates direction – Bullock
The Reserve Bank of Australia (RBA) Monetary Policy Board agreed official interest rates needed to increase despite being split on the timing, according to RBA Governor Michele Bullock. Earlier, the RBA announced it had lifted Australia’s official cash interest rate by 25 basis points to 4.10%, as forecast by many economists. The announcement came at the end of the traditional two-day bi-monthly meeting of the Board. Bullock said that although the Board was split five to four in favour of an increase, the discussion was about when, not if, rates would need to be lifted. “This was a very active discussion. The direction wasn’t the issue, it was the timing,” Bullock told a news conference. She said the Board members agreed inflation was too high and was being pressured by excess demand in the Australian economy. The RBA was more concerned about the upside in inflation than the downside in employment as a result of rates being hiked. Bullock said the members who preferred to keep the cash rate unchanged wanted to see how the Middle East war played out and additional economic data. “I understand this is tough news for people with mortgages,” Bullock said. Earlier Treasurer Jim Chalmers said inflation has mod
Interest rates
RBA raises Australian interest rates
The Reserve Bank of Australia (RBA) lifted the official cash interest rate by 25 basis points to 4.10% on Tuesday. The announcement, which was forecast by many economists, came at the end of the traditional two-day bi-monthly meeting of RBA’s Monetary Policy Board. The chances of an increase to 4.1% had been rated at 58% by the Australian Securities Exchange’s RBA rate tracker on Monday. Inflation in the country stood at 3.6% for the quarter ended December, while the monthly rate rose to 3.8% in January, slightly above expectations of 3.7%. Economic growth remained strong with fourth-quarter gross domestic product (GDP) coming in above forecasts at 2.6%, giving the central bank room to keep interest rates elevated. The decision was not unanimous with the RBA disclosing in a media release the decision was made by a majority of directors with five voting in favour of lifting the rate and four voting for leaving it unchanged. The Australian central bank last changed rates when it raised the cash rate by 25 basis points in February. In the media release issued after the meeting, the RBA’s Monetary Policy Board said data in recent months had confirmed inflationary pressures had picked up materially in the second ha
Interest rates
RBA tipped to lift Australian interest rates tomorrow
Australians face an increase in borrowing costs with the Reserve Bank of Australia (RBA) expected to lift official interest rates tomorrow. In fact, the central bank is tipped to increase them twice in three months, with another hike expected in June. A rising number of economists have forecast a 25 basis point lift in the official cash rate to 4.1% when the RBA announces its decision at 2.30 pm AEDT (3.30 am GMT) on Tuesday. The chances of such an increase were rated at 71% by the RBA Rate Tracker on 13 March, having risen from no chance on 2 March, which was prior to the outbreak of the United States and Israeli war with Iran and the consequent increase in crude oil prices. ANZ said that although it was factoring in a rise tomorrow, the decision would not be as clear-cut as in February when the central bank lifted rates by 25 basis points. “Beyond the March meeting, we still expect an additional 25 (basis point) hike in May,” the bank said in its Australian Macro Weekly email. “We then expect a pause while the RBA assesses whether the increase in the cash rate is sufficient to contain the inflation risks.” A similar note was struck by Goldman Sachs, which said it had been rating a hike at the RBA’s March mee
Interest rates
RBA not committing to future direction of rates
The Reserve Bank of Australia (RBA) has reaffirmed its determination to reduce inflation to its target range but refused to be drawn on the outlook for interest rates. RBA Governor Michelle Bullock said she recognised the 25 basis point increase in the official cash rate announced on Tuesday “was not a great outcome for mortgage holders”. “What’s also not good for them or anybody else is if inflation remains elevated,” she told a news conference. “Ultimately, it is best if we get inflation under control, and our instrument is the interest rate, and I understand that people with mortgages find that hard, but the alternative is potentially even harder, so I empathise with them.” The RBA remained focused on returning inflation to target and would continue to be driven by incoming data. The RBA earlier raised the rate to 3.85% from 3.60% to reduce inflation, in a unanimous and widely expected decision at the two-day bi-monthly meeting of the RBA’s Monetary Policy Board. The chances of an increase to 3.85% had been rated at 72% by the Australian Securities Exchange’s RBA rate tracker on Monday. Bullock said although the rate hike had been portrayed negatively, the economy was “actually in a really good position” wi