Australia's central bank lifts rates to 18-year high, split vote points to pause ahead

Australia’s Reserve Bank raised its cash rate by 25 basis points to 4.85% on Tuesday, taking borrowing costs to their highest level in 18 years. Business Recorder reported that this was the fifth increase this year, although three of the nine board members preferred no change. The bank also dropped wording that had pointed to another increase if required, while keeping its commitment to return inflation to target.

The divided decision has led markets to expect rates to remain unchanged in December. Before the meeting, 30 of 32 economists surveyed by Reuters had forecast an increase, and market pricing had indicated an 88% likelihood of a hike. The Australian dollar fell 0.3% to $0.6979, while three-year government bond futures lost 3 ticks to 95.14. Underlying inflation reached 3.7% in the third quarter, while unemployment rose to a five-year high of 4.7%, leaving policymakers balancing price pressures against a slowing economy.