Australia's central bank raised its policy rate by 25 basis points to 4.10% at its March meeting, the Reserve Bank of Australia (RBA) said, extending its tightening path for a second straight month. The move brings the cash rate to a 10-month high and reverses two of the three interest-rate reductions that were implemented last year.
Board voting revealed a narrow split. Five members supported the increase while four dissented, making this the closest decision since the RBA began disclosing individual votes. The slim margin highlights the level of debate among policymakers about the path for monetary policy.
RBA officials had warned markets that the meeting would be 'live' as they weighed persistent inflation pressures. The bank noted that core inflation was running at 3.4%, which remains above its stated target range of 2% to 3%. That stickiness in underlying inflation was cited as the primary reason higher borrowing costs were required to help contain price growth.
Market participants had been pricing in the possibility of a hike ahead of the decision, in part because senior RBA officials had signalled the policy meeting could move to a higher-rate outcome. The central bank's statement and the revealed vote split together underscore both a commitment to address inflationary pressures and the uncertainty among board members about the scale and duration of further tightening.
While the decision itself delivers a clear 25 basis point increase, the close 5-4 vote signals that any subsequent moves will likely be carefully contested. The RBA framed the hike as necessary to contain inflation that remains above the bank's target range, without offering a definitive roadmap for additional increases.
Key context maintained from the RBA statement:
- Rate increase: 25 basis points to 4.10%.
- Sequence: second consecutive monthly hike; undoes two of last year’s three cuts.
- Board vote: five in favour, four against - the narrowest since vote disclosure began.
- Inflation backdrop: core inflation at 3.4%, above the 2%-3% target range.