Reserve Bank of Australia increases official cash rate to 4.85%, bringing it to highest level since 2008

The Reserve Bank governor Michele Bullock has said that “some pain now will prevent even worse pain down the track”, after lifting official interest rates to an 18-year high of 4.85% in a bid to combat persistent inflation.

The RBA’s decision to hit mortgage holders for a fifth time in 2026 will intensify pressure on indebted households, but there were signs that the central bank will at least now wait through summer to gauge the impact of higher interest rates on the economy.

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