What happened
The Reserve Bank of Australia increased the cash rate by 25 basis points to 4.60 per cent, taking official interest rates to a 15-year high. August headline inflation reached 4.0 per cent while underlying inflation remained elevated at 3.6 per cent. Deloitte Access Economics noted that softer household spending has not yet eased price pressures, making another rate hike likely before year-end.
Why it matters here
Elevated interest rates increase borrowing costs across mortgages and commercial loans, weighing on consumer confidence and company margins. With headline inflation sitting above the central bank's target range of 2 to 3 per cent, asset valuations—particularly in high-multiple equity sectors and debt-heavy property—face ongoing pressure while fixed income yields remain attractive.
What to watch
Watch for the RBA Board's upcoming monetary policy meeting on November 3 and near-term domestic inflation data to gauge whether official rates climb higher.
Source
deloitte.com