Australia’s central bank lifts rates to 18-year high of 4.85% - The Business Times

The Reserve Bank of Australia raised its policy rate to 4.85%, an 18-year high, according to The Business Times. The move extends one of the developed world's more drawn-out tightening cycles, reflecting the central bank's continued concern that inflation is easing too slowly to return to target on its own timetable.

For markets, the decision matters on several fronts. Higher rates raise borrowing costs across mortgages, business loans and consumer credit, which can weigh on household spending and domestic demand over time. For the Australian dollar, a higher cash rate can support the currency by improving relative yield appeal, though currency moves also depend on expectations for other central banks. Australian government bond yields and rate-sensitive sectors such as property and retail are typically among the first to react.

What to watch: the central bank's accompanying commentary on the inflation outlook and any signal about whether further increases remain possible. Updated inflation and labour-market data will shape those expectations, as will how quickly tighter settings feed through to household budgets. The key question for investors is not the level of the rate itself but whether this proves the peak of the cycle or part of a longer tightening path.