The Reserve Bank of Australia increased its cash rate target by 25 basis points to 3.85 per cent on Tuesday, responding to December 2025 data showing consumer prices up 3.8 per cent year-on-year—higher than the expected 3.6 per cent.
Trimmed mean inflation hit 3.3 per cent, still above the 2-3 per cent target, with services prices and a strong job market adding pressure.
Treasurer Jim Chalmers blamed private spending like holidays, while critics including economists cite high government outlays at 28 per cent of GDP; the hike means an extra $80-100 monthly on typical $500,000 variable mortgages.