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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
Interest rates
Australia’s central bank raises interest rates
The Reserve Bank of Australia (RBA) raised the official cash interest rate by 25 basis points to 3.85% on Tuesday to try to contain an increase in inflation. The announcement, which was widely expected, came at the end of the traditional two-day bi-monthly meeting of the RBA’s Monetary Policy Board. “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 media release after the meeting. “The Board has been closely monitoring the economy and judges that some of the increase in inflation reflects greater capacity pressures. As a result, the Board considers that inflation is likely to remain above target for some time.” The Board said a wide range of data over recent months had confirmed that inflationary pressures picked up materially in the second half of 2025. “While part of the pick-up in inflation is assessed to reflect temporary factors, it is evident that private demand is growing more quickly than expected, capacity pressures are greater than previously assessed and labour market conditions are a little tight,” it said. “The Board judged that inflation is likely to remain above target for some time and it was appropriate to in
Interest rates
Fed holds rates steady as outlook improves
The United States Federal Reserve left its benchmark interest rate unchanged on Wednesday (Thursday AEDT), pausing a recent easing cycle as policymakers signalled a firmer economic outlook and reduced concern over labour market weakness. The Federal Open Market Committee (FOMC) voted to maintain the federal funds rate in a target range of 3.5%–3.75%, in line with market expectations. The decision followed three consecutive quarter-point cuts that officials had characterised as precautionary adjustments aimed at cushioning potential softness in employment. In its post-meeting statement, the central bank upgraded its assessment of economic activity while indicating that risks to its dual mandate of price stability and maximum employment are now more balanced. “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilisation,” the central bank said in its post-meeting statement, adding that “Inflation remains somewhat elevated”. The statement also removed earlier language suggesting greater concern about labour market deterioration than inflation pressures. That shift in tone points to a near-term paus