MediumIV Macro Policy & Sovereign Debt29 September 2026, Tuesday · 07:30 TRT (UTC+3)
Australia lifts rates to a 15-year high, citing energy prices
The Reserve Bank of Australia (RBA) raised its policy rate by 25 basis points to 4.60% on 29 September in a unanimous decision. The bank said global energy prices had risen sharply as the conflict in the Middle East spread.
According to the RBA's decision statement of 29 September, the cash rate target was raised by 25 basis points to 4.60%, and the decision was unanimous. The bank said inflation was running high and that some of the upside risks had materialised. Among the reasons it listed were the widening of the conflict in the Middle East, the sharp rise in global energy prices and artificial intelligence-driven demand pushing up the prices of technology goods. The bank said it would consider raising rates further if necessary.
Al Jazeera reported on 29 September that this is the highest rate since 2011 and the fourth increase of 2026. Annual inflation stood at 3.5% in July, above the bank's 2–3% target range. According to the report, about 1.8 million people, or nearly a third of mortgage borrowers, are at risk of mortgage stress. The Treasurer acknowledged that many Australians are under pressure and that the decision will make things harder.
Talay assessment
Bottom line
The RBA's decision shows the energy shock is turning into second-round price effects in advanced economies too, and that central banks are choosing to tighten rather than 'look through' it. Read alongside Norges Bank and expectations for the Fed, the global tightening cycle is broadening. This picture pushes up financing costs for emerging economies.
Likely effects
- Global interest ratesNegativeWeeks
Another G20 central bank raising rates on energy grounds supports the likelihood of tightening by other banks in October.
- Australian householdsNegative1–6 months
Repayments rise for the 1.8 million borrowers in mortgage stress, and consumption slows.
- TürkiyeNegative1–6 months
A broadening of global tightening weakens capital flows to emerging markets; pressure on the risk premium of lira assets persists.
Possibilities, ranked
- 1Wait and see50%
The RBA holds rates steady in November and monitors the path of energy prices.
Watch: Australia's September-quarter CPI data
- 2Another hike35%
If inflation keeps surprising, one more hike comes in November.
Watch: The monthly CPI indicator and inflation expectations surveys
- 3Early easing15%
Energy prices fall sharply, growth weakens and the bank extends its pause.
Watch: The Brent futures price and employment data
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- RBA cash rate target▼ 4.60% (+25 bp)
- Annual inflation, July▼ 3.5%