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Central BanksMedium•24 February 2026•

1 min read

RBA Resumes Rate Hikes to 3.85% Amid Record Stock Market Highs

Key Facts

1The Reserve Bank of Australia (RBA) raised the cash rate to 3.85%.

2The Australian stock market hit a record high despite inflationary pressures.

The Reserve Bank of Australia (RBA) has resumed its monetary tightening cycle, raising the cash rate to 3.85% in a move to combat persistent inflationary pressures. This decision makes the RBA the first major central bank to restart interest rate hikes this year, signaling a hawkish shift in policy. Despite the tightening environment, the Australian stock market reached a record high, reflecting a complex economic backdrop of growth and rising costs. The central bank emphasized that inflation remains at uncomfortable levels, necessitating further intervention to cool the economy. While the rate hike provides support for the AUD/USD currency pair, it introduces potential valuation challenges for the ASX 200 index. Investors are now closely monitoring future economic data to gauge the likelihood of additional hikes in the coming months.