Reserve Bank lifts rates to 15-year high as Labor defends economy amid inflation pressures

On Tuesday the Reserve Bank unanimously voted to raise the cash rate by 25 basis points to 4.6%, a level not seen in 15 years and the fourth increase this year, pushing typical mortgage costs up by roughly $91 per month. Treasury minister Jim Chalmers defended the government's economic management, pointing to the Iran war and a booming AI investment sector as external drivers of price rises, but acknowledged domestic factors also play a role.

Governor Michelle Bullock said inflation stems from excess demand and capacity pressures, with the oil shock worsening an already tight situation. The Coalition, led by Angus Taylor, attacked Labor for record-high public spending—26.9% of GDP, the highest since the pandemic—and argued households are bearing the burden while the government does not tighten its belt. Chalmers countered that private sector demand accounts for four-fifths of recent growth and highlighted a productivity package and NDIS reforms as evidence of serious action. Bullock warned that higher fuel costs could persist and that productivity gains remain stagnant, emphasizing the need to bring inflation down to 2-3% before real wages can rise.