RBA risks a recession but feels there's nothing else it can do
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The Reserve Bank of Australia has raised its cash rate target to 4.35 percent, marking the third consecutive rate hike in 2026 as the central bank grapples with persistent inflation pressures. The 0.25 percentage point increase brings the cash rate back to levels seen before three rate cuts implemented last year, signaling the RBA's renewed commitment to fighting inflation despite economic headwinds.
The rate decision sent ripples through financial markets, with the ASX 200 closing 0.2 percent lower at 8,680 points, marking a new 20-day low. RBA Governor has warned Australians to brace for worsening inflation conditions despite the aggressive rate hiking cycle, highlighting the central bank's ongoing struggle with rising prices and an increasingly challenging economic outlook. The move reflects the difficult balancing act facing monetary policymakers as they attempt to contain inflation while managing broader economic stability.
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Source Coverage
RBA risks a recession but feels there's nothing else it can do
Monetary policy trade-offs are getting worse. The Reserve Bank of Australia is confronting rising inflation and downgraded growth forecasts. And there's nothing it can really do about it.
Read on ABC AU→
The RBA raises its cash rate target to 4.35%
The Australian central bank struggles with the inflation surge and rising outlook as they push through their third consecutive hike
Read on Interest→RBA governor warns Australians to brace for inflation to get worse despite rate hikes — as it happened
The RBA delivers another rate rise while the local share market closes lower amid escalating tension in the Middle East. Look back on how the day unfolded with our specialist business reporters on our blog.
Read on ABC AU→