The Reserve Bank of Australia (RBA) said its Monetary Policy Board unanimously agreed at its first meeting of 2026 to raise the cash rate target from 3.60 percent to 3.85 percent, News.Az reports, citing foreign media.
This decision marks the first increase in the cash rate target since November 2023 and follows three separate rate cuts of 0.25 percentage points implemented by the central bank during 2025.
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The Monetary Policy Board noted that while inflation has declined significantly from its 2022 peak, it accelerated noticeably in the second half of 2025.
Latest figures from the Australian Bureau of Statistics (ABS) show that the consumer price index (CPI) increased by 3.8 percent in the 12 months to December 2025, compared with a 3.4 percent rise recorded in November.
The trimmed mean measure of inflation, which the RBA uses as a key gauge of underlying price pressures, rose by 3.3 percent year-on-year in December, up slightly from 3.2 percent in November.
According to the Monetary Policy Board, inflation is now expected to remain above the central bank’s 2–3 percent target range “for some time.”
“It is evident that private demand is growing more quickly than expected, capacity pressures are greater than previously assessed, and labour market conditions are a little tight,” the board said in its statement.
In its updated forecasts released on Tuesday, the RBA projected that annual CPI growth will reach 4.2 percent by June 2026, higher than the 3.7 percent forecast in November, before easing to 2.9 percent by June 2027.
