\n<\/p>\n
Australia’s central bank on Tuesday raised policy rates to 4.6%, the highest level in 15 years, as the country looks to contain inflation stoked by the Middle East conflict. <\/p>\n
The hike of 25 basis points to the cash rate was in line with expectations by economists polled by Reuters.<\/p>\n
The Reserve Bank of Australia has now raised rates four times this year by a total 100 basis points as inflation remains sticky.<\/p>\n
In its statement<\/a>, the RBA said some of the upside risks flagged in its August meeting were now materializing. <\/p>\n “The conflict in the Middle East has broadened and global energy prices are now much higher than had been assumed,” the central bank wrote, adding that AI-related demand was driving rapid price increases for technology-related goods.<\/p>\n The RBA also said that it would “continue to do what it considers necessary,” to contain inflation, including increasing the policy rate further.<\/p>\n The S&P\/ASX 200<\/a> and the Australian dollar were flat following the policy decision. \u00a0<\/p>\n Australia’s inflation has run above its target band of 2%-3% for 2026, hitting a high of 4.6% in March. The country’s inflation rate last came in at 3.5% in July, beating estimates. August print is set to be released Wednesday. <\/p>\n A note from Bank of America last week said inflation was accelerating rather than converging back to target. “The July CPI was the clearest evidence of this shift, adding to a pattern of rising core inflation in recent months.” <\/p>\n There is also evidence of second-round effects from energy costs, reinforcing the risk that inflation is becoming entrenched, BofA said.<\/p>\n “The Middle East conflict remains unresolved, and there are scenarios where inflation is higher and activity lower than forecast,” the RBA wrote.<\/p>\n The central bank had warned of a growth slowdown in the country as rates rise, with Australia’s economy growing at 2.1%<\/a> in the second quarter, down from 2.5% in the first three months of the year.<\/p>\n<\/div>\n\n
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