Australia's Reserve Bank raises interest rates to a 15-year high as governor warns government spending is fuelling inflation

From the Newshound archive · first published 29 September 2026 · last updated 30 September 2026.

Reserve Bank of Australia Governor Michele Bullock on Tuesday lifted the cash rate to 4.6 per cent — a 15-year high and the fourth increase this year — tightening the screws on borrowers at a moment when cost-of-living pressures are at their most acute. She pointedly noted that the RBA had already moved on rates in February, weeks before hostilities broke out with Iran, cutting the ground from under Labor's efforts to pin the inflation crisis on Middle East instability. Asked directly whether government spending was complicating her task, Bullock stopped well short of letting the Albanese administration off the hook.

Bullock told reporters aggregate demand includes both public and private spending — a direct signal that Labor's expenditure is part of the problem.

She acknowledged that rising oil prices linked to the Middle East conflict are squeezing households, but stressed that homegrown inflationary pressures had taken hold well before the war.

The RBA chief declined to single out any one spending component but said demand is 'growing a bit too quickly relative to supply', leaving the government with no easy cover.