RBA breaks the pause with a shock rate hike

The Reserve Bank of Australia has lifted the cash rate 25 basis points to 3.85%, its first hike in nearly two years, jolting borrowers and markets.

Inflation’s late-2025 rebound and a tight labour market forced the move, with policymakers warning rates may stay higher for longer.

The fallout is only starting to show - mortgages reset, confidence wobbles, and investors debate whether this is a one-off or the start of something bigger.