Australia hikes rates again and warns inflation will stay higher for longer
CNBC • • world
Key Points:
- Australia's central bank raised its policy rate to 4.35%, matching the December 2024 peak, marking the third consecutive increase as inflation remains elevated.
- The Reserve Bank of Australia (RBA) cited rising inflation driven by Middle East conflicts, which have increased fuel and commodity prices, potentially causing broader price increases.
- Inflation forecasts were revised upward to 4.8% for the June quarter and 4% for the year ending 2026, while economic growth projections for 2026 were lowered to 1.3%.
- The RBA signaled the possibility of further rate hikes, with projections indicating a policy rate of 4.7% by December 2026, the highest since 2011 if exceeded.
- Despite strong economic growth of 2.6% in the fourth quarter, persistent inflationary pressures and geopolitical uncertainties continue to influence the RBA's cautious and hawkish stance.
