The Reserve Bank board has increased the official cash for its second meeting in a row, saying there is now an increased risk inflation will stay above its target band for longer than previously expected.
By AAP & CBA Newsroom
17 March 2026
The Reserve Bank of Australia has increased official interest rates for the second month in a row as war in the Middle East compounds inflation concerns.
In a split five-four decision on Tuesday, the central bank's monetary policy board lifted the cash rate by 25 basis points to 4.1 per cent, following a hike of the same size in February.
The move was tipped by economists and money markets, which had priced in the chance of a hike at more than two-thirds.
Domestic price pressures, including a tight labour market and strong economic growth, were already pushing inflation too high for the RBA's liking before the US-Israeli attack on Iran led to the closing of the Strait of Hormuz and plunged global energy markets into chaos.
“A wide range of data over recent months have confirmed that inflationary pressures picked up materially in the second half of 2025,” the RBA board said in its statement accompanying the decision.
“While part of the pick-up in inflation is assessed to reflect temporary factors, the Board judged that the labour market has tightened a little recently and capacity pressures are slightly greater than previously assessed. Developments in the Middle East remain highly uncertain, but under a wide range of possible scenarios could add to global and domestic inflation.”
According to monthly data released by the Australian Bureau of Statistics, headline inflation rose 3.8 per cent in the year to January, keeping it above the RBA's 2-3 per cent target band.
The Reserve Bank has in the past been loath to move rates at meetings that don’t immediately follow the release of quarterly inflation figures, which provide its preferred measure of underlying price growth - the quarterly trimmed mean.
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