‘If we have to change tack, we will’: RBA hikes rates but not aiming to put Australia into recession, Bullock says

Reserve Bank of Australia’s second consecutive increase lifts cash rate target to 4.1%, back to where it was in February last year Follow our Australia news live blog for latest updates Get our breaking news email, free app or daily news podcast The Reserve Bank has increased interest rates and left the door open to further hikes, warning inflation will stay higher for longer amid war in Iran and soaring petrol prices. The hike followed a move in February and lifted the RBA’s cash rate target to 4.1%, back to where it was in February 2025, wiping out the relief offered by two cuts last year. Michele Bullock, the RBA governor, said strong growth in employment and spending had kept upward pressure on prices and the war in Iran would only worsen the problem. “High petrol prices will add to inflation, but they’re not the reason for today’s decision,” she said. The bank wanted to cut household spending and prevent businesses passing on higher fuel costs by charging higher prices, the governor said. “If we don’t bring the excess demand down, then businesses are just going to build that into their costs, so it’s going to be even worse for everyone,” Bullock said. House