The Reserve Bank of Australia said inflation remained high, partly due to rising fuel and commodity prices linked to the Middle East conflict. (EPA Images pic)SYDNEY: Australia's central bank raised its key interest rate to a 18-year high on Tuesday, citing the prolonged war in the Middle East and persistent inflationary pressures.

In a statement, the Reserve Bank of Australia said it would lift its cash rate by 25 basis points to 4.85%.

"Inflation remains elevated," it said. "This partly reflects higher fuel and other commodity prices affected by the conflict in the Middle East."

"AI-related investment is driving rapid growth in prices for technology-related goods, and inflation in many goods and services remains high."