The Australia/">Reserve Bank of Australia raised its benchmark interest rate by 25 basis points to 4.85% on Tuesday, its highest level in 18 years, as investment related to artificial intelligence and rising energy prices added to inflationary pressure.
The central bank’s monetary policy board voted 6–3 in favor of the increase. Three members preferred to keep the rate at 4.60%. The RBA warned that inflation would remain elevated through much of 2027 and delayed its forecast for inflation to return to the upper end of its 2% to 3% target range until late that year—about three quarters later than previously projected.
The board said AI-related investment was driving rapid price growth for technology goods. It also pointed to higher fuel and commodity prices affected by the conflict in the Middle East.
Australian Treasurer Jim Chalmers said the decision was widely expected but would still be difficult for families and businesses facing costs beyond their control.
The RBA’s move contrasts with the US Federal Reserve, which held rates last week. Fed officials have also warned that the AI investment boom is contributing to price pressures, including in computer equipment and utilities.
Sources: Cointelegraph.