In this article5 sections
Australia’s central bank lifted its benchmark cash rate by 25 basis points to 4.85% on Tuesday, the highest level in 18 years, as Cointelegraph reported. The Reserve Bank of Australia’s board split 6–3 on the decision, with three members favouring a hold at 4.60%, per the RBA’s media release.
In its statement, the board said inflation is now expected to stay elevated through much of 2027 and will not fall back into the 2%–3% target band until late 2027, roughly three quarters later than previously forecast. It pointed to higher fuel and commodity prices linked to the Middle East conflict, alongside AI-related investment that it said is driving rapid growth in prices for technology-related goods.
Also read: Bitcoin Near $80,000 Pressured by Rising US Inflation Expectations
Key facts
- The RBA raised the cash rate by 25 basis points to 4.85% on Tuesday, its highest since November 2008 (CNBC).
- The vote was 6–3, with three board members preferring to keep rates at 4.60% (Cointelegraph).
- CNBC reported the hike was the RBA’s fifth this year and matched expectations from economists polled by Reuters.
- Australia’s consumer price index rose 4.3% in September, up from 4% in August, per CNBC.
- GDP rose 2.1% in the June quarter from a year earlier, down from 2.5% in the March quarter (CNBC).
AI and energy in the inflation forecast
The RBA framed AI investment as a cost channel rather than a productivity story this time. Its statement singled out technology-related goods prices as a source of upward pressure alongside fuel and commodities.
The US Federal Reserve has run into the same theme. Cointelegraph noted Fed officials have warned that the AI investment boom is adding to price pressures, including for computer equipment and utilities, as set out in a Federal Reserve speech on the topic. The Fed held rates last week, a contrast with Australia’s move.
Australian Treasurer Jim Chalmers said the decision was widely anticipated but still hard on households and businesses. CNBC reported that in September, RBA governor Michelle Bullock called inflation “too high,” attributing it to higher oil prices from the Iran War and stronger domestic spending, and said further increases would follow if needed.
Precious metals under pressure
The same forces have weighed on gold and silver. Mint reported gold’s worst-ever October, with the metal down to ₹1,42,000 per 10 grams on November 1, 2026, including taxes, from ₹1,45,200 on Friday. Silver fell to ₹1,86,000 per kilogram from ₹1,90,200.
International gold dropped below $3,900 an ounce, its lowest since October 2025, according to Trading Economics data cited by Mint. Gaurav Garg of Lemonn told Mint that inflation data and expectations of a December Fed rate hike were reducing demand for non-yielding assets, while Rahul Khetawat of 360 ONE Asset pointed to higher energy prices and hawkish Fed commentary.
Why it matters
Higher Australian rates raise borrowing costs for households and businesses already facing cost-of-living pressure, and the RBA is trying to slow inflation without tipping activity into contraction. Bullock said a recession was not the bank’s base case, per CNBC.
For markets, the combination of a hawkish Fed and a fresh RBA hike tightens financial conditions at a time when AI spending is itself being cited as an inflation source — a link that matters for crypto and tech valuations, which tend to react to rate expectations.
What to watch
The next signals are the Fed’s December decision, which Mint reported markets expect to be a hike, and Australia’s incoming inflation and GDP data as the RBA tests whether its fifth hike of the year is enough.
This article is not financial advice. Markets are volatile and uncertain, and readers should do their own research.
Reported by Cointelegraph.
Sources: Cointelegraph, Mint, CNBC