RBA Lifts Interest Rates by 0.25 Percentage Points, Says Inflation Picked Up in Second Half of 2025

The Reserve Bank has lifted the interest rates by 0.25 percentage points during its February meeting.

This means that new cash rate has gone up to 3.85 per cent from the previous 3.6 per cent.

RBA Lifts Interest Rate

According to ABC News, inflation greatly affected the decision made to lift interest rates. The decision was made unanimously.

“While inflation has fallen substantially since its peak in 2022, it picked up materially in the second half of 2025,” RBA said in a statement.

“The Board has been closely monitoring the economy and judges that some of the increase in inflation reflects greater capacity pressures,” the statement added. “As a result, the Board considers that inflation is likely to remain above target for some time.”

‘Market Conditions Remain a Little Tight’

RBA’s statement also indicates that “labour market conditions remain a little tight and that they have stabilised in recent months, in line with the pick-up in momentum in economic activity.”

According to ABC News, experts are expecting for interest rates to go up again at some point this year.

RBA Governor Michele Bullock has acknowledged that the decision will be a disappointing for Australian households. However, according to news.com.au, she insists it is the right decision to make at this point.

” … what’s also not great for them or for anyone else is if inflation remains elevated because every time they go to the shop, every time they go to buy their groceries, every time they go to get personal services, medical, if inflation is high, that’s going to keep going up,” she said.