Australia lifts rates to 18-year high as AI boom, energy costs fuel inflation

The Reserve Bank of Australia raised its benchmark rate to 4.85% on rising technology costs from AI investment and higher energy prices.

Australia’s central bank raised its interest rate by 25 basis points to 4.85% on Tuesday, warning that inflation would stay elevated through much of 2027 as energy costs and AI-related investment added to price pressures.

The Reserve Bank of Australia’s monetary policy board voted 6–3 for the increase, with three members preferring to hold rates at 4.60%.

The bank pushed back its forecast for inflation to return to the top of its 2% to 3% target range until late 2027, around three quarters later than previously expected.

Read more