RBA lifts cash rate to 4.6%, highest since 2011

The Reserve Bank of Australia has raised its key interest rate to 4.6% — the highest level since 2011.

The RBA's rate-setting board reached the decision unanimously, according to a statement accompanying the announcement dated 29 September 2026.

Governor Michele Bullock pointed to an unusual driver behind the tightening: the global boom in artificial intelligence. She said the AI boom has "driven significant price rises" and is contributing to demand in the Australian economy.

The statement carried a blunt warning. The bank said its fears about inflation are beginning to be realised, and it stands ready to lift interest rates again if conditions warrant.

The move to 4.6% marks a significant step in the RBA's tightening cycle, returning the cash rate to a level last seen more than a decade ago. For Australian borrowers, the decision pushes mortgage and business lending costs to their highest point since the aftermath of the global financial crisis era.

The unanimous vote signals a clear consensus on the board that inflation risks have shifted from latent to active. By explicitly stating that its inflation fears "are beginning to be realised", the RBA has moved from a watching brief to a preemptive posture, leaving the door open to further increases.

Bullock's attribution of price pressure partly to the AI boom is notable. It links Australian monetary policy to a global technology investment cycle, suggesting the RBA views demand generated by AI-related activity — rather than purely domestic factors — as a material input to its rate decisions.

Investors and households will now watch the RBA's next meetings for evidence of whether the bank follows through on its warning. The governor's remarks, delivered in a video statement explaining the decision, frame the 4.6% cash rate not as an endpoint but as a position from which the bank can act again.