03.02.202603:34:27UTC+00Australia Raises Cash Rate by 25Bps to 3.85%

The Reserve Bank of Australia uniformly increased the cash rate by 25 basis points to 3.85% during their initial policy meeting of 2026, aligning with market forecasts. This marks the first rate hike since November 2023, reflecting a notable resurgence in cost pressures that have escalated significantly in the latter half of 2025. The central bank highlighted that recent information indicates enduring cost pressures, fueled by high service costs and a constrained labor market. Consequently, policymakers anticipate that inflation will likely stay above the 2–3% target range for an extended period. The RBA stressed that future policy decisions will hinge on new economic data and its ongoing evaluation of the economic outlook and related risks, including the balance between controlling inflation and fostering economic growth. Despite recognizing the progress made in reducing inflation over the past year, the policymakers underscored their primary focus on ensuring price stability, suggesting a measured yet data-driven approach to forthcoming actions.