The Reserve Bank of Australia lifted its key interest rate by 25 basis points to 4.6 percent, the highest level since November 2011.
RBA Cites Inflation, Middle East Conflict and AI‑Driven Demand
Board members said elevated inflation and rising energy prices, spurred by the widening Middle East conflict, drove the decision.
“Inflation remains elevated and some of the upside risks flagged in August are materialising,” the board stated in a unanimous release.
AI‑related demand is pushing global technology‑goods prices higher and straining domestic capacity, the board added.
Treasurer Jim Chalmers acknowledged the move was expected and said households are feeling the squeeze.
“We know a lot of Australians are under pressure and this will make things harder. Inflation and interest rates are going up around the world but we know that doesn’t take the sting out of today’s decision,” Chalmers told reporters on September 29.
He blamed the Middle East war for the tighter monetary stance, noting that the conflict has lifted global energy costs.
Conservative commentator David Koch warned that consumer spending is barely rising, with a 0.4 percent increase driven largely by a 10.3 percent jump in electric and hybrid car purchases.
“Household spending crept up just 0.4 percent, and almost half of that was a 10.3 percent jump in car purchases as families moved into electric and hybrid vehicles … Australians spending money in order to spend less money on petrol. That is hardly an exuberance,” Koch wrote in an open letter.
Koch also highlighted a 4.5 percent unemployment rate and declining consumer sentiment, urging the Reserve Bank governor to pressure governments for fiscal restraint.
One Nation leader Pauline Hanson promoted her party’s “Super Pay Boost,” proposing that Australians could access up to 25 percent of future super contributions as cash for mortgages or rent, amounting to roughly $82 more per week after tax.
Liberal Shadow Treasurer Tim Wilson argued the Reserve Bank’s hand was forced by domestic inflation drivers, not external shocks.
