Australia now has a higher headline policy rate than the United States, the UK, the euro area, Canada and Japan. The RBA lifted its cash rate target by 0.25 percentage points to 4.60% on Tuesday 29 September, its highest level since late 2011. That's a real, arresting comparison — particularly when you're paying an Australian mortgage. But the social-media claim that we're the worst of all advanced countries goes one step too far.
A chart comparing September 2025 with September 2026 is doing the rounds. Its basic story is striking: Australia's policy rate rose from 3.60% to 4.60%, while rates in several of the countries it features are lower today. We checked the latest decisions against the central banks themselves, rather than treating a graphic as a source.
The scorecard after yesterday's decision
| Economy | Policy benchmark at 30 September 2026 | Most recent decision |
|---|---|---|
| Australia | 4.60% cash rate target | RBA, 29 September |
| United States | 3.75–4.00% federal funds target range | Federal Reserve, 16 September |
| United Kingdom | 3.75% Bank Rate | Bank of England, 17 September |
| Euro area | 2.50% ECB deposit facility rate | ECB, 10 September; effective 16 September |
| Canada | 2.25% overnight target | Bank of Canada, 2 September |
| Japan | Around 1.25% overnight call rate | Bank of Japan, 18 September |
Yes: Australia is highest in this six-economy comparison. It is 0.60 percentage points above the top of the Fed's target range, 0.85 above the UK and 2.10 above the ECB's deposit rate. The euro-area 2.65% figure shown on some graphics is the ECB's main refinancing rate, a different ECB instrument; the deposit rate is 2.50%. Either way, Australia's number is higher.
No: Australia isn't the highest in every advanced economy. Iceland's central bank set its key seven-day deposit rate at 8.00% in August. Norway raised its policy rate to 4.50% in September — just below Australia's. Leave Iceland out of the graphic and the "worst in the world" caption writes itself. Put it back and that claim falls apart.
Why Australia's path stings more than a league table suggests
The RBA didn't say it was competing with other central banks. Its statement points to stronger-than-expected domestic inflation and growth, higher fuel costs linked to Middle East supply disruption, and lingering pressure on businesses' costs. It also notes that housing prices have fallen in most capitals and new housing loans have declined noticeably. Those are simultaneous pressures, not proof that one headline rate explains everything.
The comparison matters to households because a central-bank rate is not your mortgage rate. Each country's housing loans, fixed-rate terms, bank pricing and inflation differ. A higher cash rate does not automatically prove Australians have the world's highest mortgage payments or the world's worst housing affordability. But if your Australian loan is variable and your lender passes through the full 0.25-point rise, the impact is very real.
For illustration, on a $600,000 loan with 25 years remaining, a move from 6.00% to 6.25% lifts principal-and-interest repayments by roughly $92 a month. Your actual increase depends on your balance, term, existing rate and what your lender passes on. Property investors should test that extra cost against net rent after rates, insurance, repairs, vacancy and land tax — not just compare central-bank headlines. Our negative gearing calculator can help stress-test the after-tax side.
The before-and-after that changes the story
In September 2025, the RBA cash rate was 3.60%. It is now 4.60%: a full percentage point higher in a year. Over roughly the same period the US Fed moved from a 4.00–4.25% target range in September 2025 to 3.75–4.00% this month. Australia's benchmark has crossed above even the top of the US range. That reversal — not an invented claim about being number one on earth — is the story.
Yesterday's move also turns our pre-meeting analysis of how a hike could squeeze borrowing power from a forecast into a question for borrowers to recalculate with their own lender. Don't treat its illustrative suburb counts as a promise about today's individual approval. If you are buying, ask your broker to rerun serviceability on the actual post-decision rates, including APRA's assessment buffer. If you already own, check the lender's repricing notice and model the next 12 months of cash flow before making portfolio decisions.
Bottom line: among the US, UK, euro area, Canada, Japan and Australia, we're now at the top of this snapshot. That is newsworthy enough. Iceland is a counterexample to "highest in the developed world," and no single policy-rate table can rank the real cost of every country's mortgages.
Rates and decisions checked as at 30 September 2026. This is general information, not personal financial, credit or tax advice. Policy rates may change at later meetings; check your lender and seek licensed advice for your circumstances.
