Australia lifts rates to 4.85%, 18-year peak, amid AI and energy costs

On Thursday, the Reserve Bank of Australia (RBA) raised its policy rate to 4.85%, the highest level in 18 years. The decision followed a steep rise in inflationary pressures, driven in part by increased spending on artificial intelligence technologies and higher energy costs.

RBA’s policy shift amid AI and energy inflation

The RBA cited technology spending as a new source of inflation, noting that firms are allocating more capital to AI initiatives. At the same time, global supply chain disruptions and commodity price swings have pushed energy prices upward, feeding into broader price levels.

A higher policy rate typically supports the Australian dollar against other major currencies and can lift yields on domestic bonds. For crypto investors, a stronger AUD and tighter monetary policy may reduce appetite for risk assets, potentially influencing token valuations denominated in AUD.

Market participants will likely monitor subsequent RBA minutes and inflation releases to gauge whether the rate hike signals a sustained tightening stance. The move also underscores how technology and commodity dynamics can shape central bank policy even in developed economies.

Based on reporting from Cointelegraph. Read the original.