The Reserve Bank of Australia raised its cash rate target by 0.25 percentage points to 4.6 percent on Tuesday, reaching the highest level since late 2011.

The unanimous decision by the nine-member Monetary Policy Board marks the fourth rate increase this year and brings the total tightening in 2026 to a full percentage point. The move came as inflation remains stubbornly above the central bank's 2 to 3 percent target band.

In its statement, the RBA cited materializing upside risks to inflation, including higher global energy prices stemming from the conflict in the Middle East and rapid price increases for technology-related goods driven by AI demand. Domestic factors such as weak productivity growth also factored into the outlook.

Australia's annual inflation stood at 3.5 percent in July, with core measures running around 3.6 percent. The bank noted that the economy appears to be slowing due to prior tightening but judged that further action was needed to return inflation to target in a reasonable timeframe.

The decision will increase mortgage payments for millions of Australian households. Variable rates on owner-occupier loans are expected to rise toward 6.5 percent on average. Markets had largely priced in the hike, and the Australian dollar showed little reaction.

The RBA signaled it stands ready to raise rates further if data warrant, with the next inflation figures due Wednesday. This positions Australia with one of the higher policy rates among major Western economies.