Reserve Bank of Australia raises cash rate to 4.60 per cent

The Reserve Bank of Australia (RBA) has increased its cash rate by 25 basis points to 4.60 per cent. The unanimous decision by the Monetary Policy Board, chaired by Governor Michele Bullock, serves as a defensive measure against inflation, which reached 4.0 per cent in August.

This rate hike is expected to impact various sectors, including housing and rate-sensitive equities. For international investors, particularly in the US, the move may strengthen the Australian dollar, potentially increasing returns on unhedged ASX-linked ETFs even if local share prices remain stagnant. However, the increase also places additional pressure on the housing market and consumer stocks.

In response to the shifting economic landscape, real estate leaders, such as Harcourts NSW CEO Andrew McCulloch, have advised industry professionals to focus on discipline and local expertise. McCulloch emphasized the importance of maintaining client connections and understanding street-level data to navigate the uncertainty caused by rising borrowing costs.