At its meeting this morning, Tuesday, March 17, the RBA Board of Governors decided to raise the interest rate by 25 basis points to 4.10% from 3.85%, as expected, for the second consecutive meeting.

In its policy statement, the RBA explained that inflation, after declining significantly since its peak in 2022, is expected to rise sharply in the second half of 2025. Information suggests that part of this increase reflects growing pressure on production capacity and higher fuel prices following the conflict in the Middle East, which could further fuel inflation if it persists. The Board believes there is a significant risk that inflation could remain above the target for a longer period than previously anticipated.

The decision was made by a vote of five to four. The Board will pay close attention to data and evolving assessments of the outlook and risks to guide its decisions. It will remain focused on its mandate of achieving price stability and full employment and will take whatever measures are necessary to achieve this.