MELBOURNE, Australia — Australia's central bank lifted its benchmark interest rate Tuesday by a quarter percentage point to 3.85%, after three rate cuts last year and as inflation surges.
The Reserve Bank of Australia has boosted its cash rate for the first time since November 2023, when the rate rose from 4.10% to 4.35%.
The rate hike was widely expected after government data last week showed that inflation had run away to 3.8% for the 12 months through December. The annual rate had been 3.4% through November.
The bank adjusts interest rates to steer inflation toward a target band of between 2% and 3%.
''The board considers that inflation is likely to remain above target for some time,'' the bank said in a statement.
Inflation had fallen substantially since it peaked at 7.8% in the last three months of 2022, but had ''picked up materially in the second half of 2025,'' the statement said.
''Uncertainty in the global economy remains significant but so far there has been little or no depressing effect on the Australian economy; indeed, recent growth and trade in Australia's major trading partners has surprised on the upside,'' the bank said.
Treasurer Jim Chalmers described the rate hike as ''difficult news'' for millions of Australians with mortgages and businesses.
