Australian Central Bank Raises Interest Rates to 4.85%

The Reserve Bank of Australia (RBA) raised its official interest rate by 25 basis points to 4.85%, reaching its highest level in 18 years, marking the fifth increase this year. The vote was 6 members in favor and 3 against, suggesting that the end of rate hikes may be approaching. Governor Michele Bullock indicated that there is no clarity on the next steps and that three board members expressed concerns about the weakness in the housing sector and rising unemployment. Bullock mentioned that, after five increases this year, it is an appropriate time to pause and assess the economy's response to the more restrictive monetary policy. The RBA's forecasts indicate that overall inflation will reach 4.5% in the fourth quarter before returning to the target range of 2% to 3% in the second half of next year, while unemployment is expected to exceed 5% in the next two years. The bank's decision was in line with market consensus, where 30 out of 32 surveyed economists anticipated a rate increase, with an 88% probability in market pricing.

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