RBA lifts rates to 4.85%

The Reserve Bank raised interest rates on Tuesday to 4.85%, marking the fifth hike in 2026 and the highest level since the Rudd era.

Inflation to stay high through 2027

The RBA board said headline and trimmed mean inflation would remain above 3% until end of 2027, later than previously forecast, and not reach 2.5% until mid-2028.

Chalmers warns of more pain ahead

Treasurer Jim Chalmers said the rate hike would be difficult news for Australians already struggling with cost of living and guaranteed another hit in opinion polls.

“It will be difficult news for many Australians who are already paying a hefty price for circumstances outside of their control.”

Chalmers blames Trump's Iran war

The treasurer rejected full blame for Labor, pointing to high fuel prices from Trump's war in Iran as delaying progress on bringing down stubborn inflation.

Opposition sees political opportunity

Shadow treasurer Tim Wilson said Labor would not deliver sufficient cuts to offset new spending, claiming for every two dollars of savings they spend three more, stoking inflation.

“for every $2 of savings they claim to find, they go on and spend another $3, and it ends up only stoking inflation further”

RBA signals pause on future hikes

The RBA dropped a reference to possible future rate rises from its statement. Governor Michele Bullock said it was appropriate to take stock before deciding the board's next move.