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Australia's central bank raises cash rate 25bps to 3.85%

BY Reuters | ECONOMIC | 02/02/26 10:37 PM EST

SYDNEY, Feb 3 (Reuters) - Australia's central bank on Tuesday raised its cash rate by 25 ?basis points to 3.85%, the first ?hike in two years, ?saying the economy ?was ?growing faster than expected and inflation ?was likely to ?remain above target for some time.

Wrapping up ?a two-day ?policy ?meeting, the Reserve Bank of Australia said private demand had ?been stronger than expected and capacity pressures were greater than previously assessed, with the labour ?market ?still tight.

Investors had been leaning toward a ?rate rise given inflation surprised on the high side in the fourth quarter, while consumer spending had picked up ?sharply and unemployment hit a seven-month low in December. (Reporting by Wayne ?Cole; Editing by Shri Navaratnam)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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