Australia raises interest rate to 18-year high

Australia's central bank raised its key interest rate to an 18-year high on Tuesday, saying inflation remained elevated and citing pressure from the Middle East conflict and technology-related prices.

The Reserve Bank of Australia lifted its cash rate by 25 basis points to 4.85 percent. It was the fifth increase this year and took rates to their highest level since late 2008.

The RBA said higher fuel and other commodity prices linked to the conflict in the Middle East were contributing to inflation. It also said AI-related investment was driving rapid growth in prices for technology-related goods.

The rate rise adds to pressure on Australian households by increasing home mortgage payments. The bank warned that uncertainty over domestic activity, inflation and global oil supply disruption remained high.