The Reserve Bank of Australia raised the cash rate from 3.85% to 4.1% on Tuesday.
Amid rising energy costs due to the escalating conflict in Iran, which could further intensify price pressures, the Reserve Bank of Australia (RBA) hiked rates for the second consecutive meeting on Tuesday, strengthening efforts to tackle persistent inflation.
According to combined reports from Bloomberg and Xinhua News Agency, the RBA raised the cash rate from 3.85% to 4.1% on the 17th, marking the first back-to-back rate hikes since June 2023.
The Reserve Bank's nine-member board decided to tighten monetary policy with a vote of 5 to 4.
Data from the Australian Bureau of Statistics showed that the Consumer Price Index rose by 3.8% over the 12 months to January, exceeding the central bank's target range of 2% to 3%. The central bank stated that the risk of inflation remaining above the target is now more pronounced than previously assessed.
The statement said: "The conflict in the Middle East has led to a sharp rise in fuel prices, and if this trend continues, it will intensify inflation."
Michael Tomic, Commonwealth Bank of Australia's rate strategist, said: "The statement itself is still hawkish, but a 5-to-4 vote result is being interpreted as less hawkish than expected." This "shows the importance of the composition of committee members, and highlights that given how close this vote was, there is a risk of no rate hike in May."
The next meeting of the Monetary Policy Committee will be held in early May.