Cash rate target raised 25 basis points to 4.60 percent
Australia's central bank raised the cash rate target by 25 basis points to 4.60 percent at its September meeting. The Monetary Policy Board reached a unanimous decision amid persistent capacity pressures and elevated energy prices.
Global energy shocks and capacity limits
The Monetary Policy Board voted unanimously to lift the policy rate to 4.60 percent, marking the third increase since the beginning of the year.
Board members pointed to rising energy costs following the escalation of the Middle East conflict and surging tech prices fueled by global demand for artificial intelligence infrastructure.
Domestic capacity constraints remain acute, with central bank liaison confirming that businesses continue to pass through higher input expenses into retail prices.
While output growth slowed, June quarter economic activity came in stronger than projected, and short-term measures of inflation expectations remain elevated across the domestic economy.
Housing cools while business debt expands
The rate increase arrives despite signs of cooling in consumer spending and a distinct downturn in the housing sector, where capital city prices and new mortgage lending have dropped noticeably.
Conversely, business investment and commercial debt growth remain robust.
Labour market conditions have continued to ease broadly in line with central bank projections.
However, sluggish domestic productivity growth continues to restrict the economy's potential output.
Zero tolerance with shrinking room for error
By acting on external supply shocks and lingering domestic demand, the Board shows zero tolerance for entrenched inflation.
Yet tightening into a cooling housing market and weak productivity risks overtightening before previous moves fully take hold.
The central bank prioritizes credibility over growth buffers.