Australian central bank lifts key interest rate to 15-year high

Australia’s central bank raised the key interest rate to a 15-year high on Tuesday to curb inflation stoked by rising oil prices.

The Reserve Bank of Australia lifted its cash rate 25 basis points to 4.6%, it said, citing a broadening conflict in the Middle East and high global energy prices.

“There have been further disruptions to global oil supply, and recent data suggest that growth and inflation in Australia have been higher than expected,” the bank said in a statement.

Higher fuel prices were being passed through to prices of other goods and services, it said.

The rise of artificial intelligence was also driving up technology costs.

“AI-related demand is driving rapid growth in global prices for technology-related goods,” the bank said.

Australia’s major trading partners were experiencing stronger economic growth than expected, as AI-related investments outweighed the adverse effects of the Middle East conflict, it said.

A downturn in Australia’s housing market had created economic uncertainty at home, the Reserve Bank said.

Housing prices have fallen in most of Australia’s state capitals, and new housing loans have declined noticeably, it said.