The Reserve Bank of Australia raised its cash rate target to 4.85% on Nov. 3, tightening financial conditions as it delayed its forecast for inflation to reach the top of its target range until late 2027.
The Monetary Policy Board approved the quarter-point increase in a six-to-three vote. Three members favored leaving the benchmark at 4.60%, and the change takes effect Nov. 4. The target guides what banks pay to borrow unsecured funds from one another overnight; the RBA says it influences loan and savings rates.
The hike brings 2026’s total to five. Earlier increases took effect Feb. 4, Mar. 18, May 6 and Sept. 30. RBA rate history places the new level at its highest since 2008; EconoTimes previously covered the rate increase and its inflation outlook.
The Australian Bureau of Statistics reported that the Consumer Price Index rose 4.3% in the 12 months through September, compared with 4.0% in the year through August. Trimmed mean inflation was 3.6%, up from a revised 3.5%. The RBA expects inflation to remain above 3% for the coming year and reach the upper end of its 2% to 3% target range in late 2027, about nine months later than its previous projection. Its November monetary policy statement separately puts a return to the target’s midpoint in mid-2028.
The RBA linked price pressure in part to the Middle East conflict’s effects on fuel and commodity markets. It also pointed to domestic capacity constraints, technology prices amid AI investment and costs facing businesses. The bank described weaker economic activity, falling home prices and rising unemployment, and expects higher rates and housing-market weakness to restrain household spending and dwelling investment. It also noted stronger near-term business investment, including in data centers.
Canstar estimated that if lenders pass on the full increase, minimum monthly repayments would rise A$107 on a modeled A$700,000 owner-occupier principal-and-interest loan with 25 years remaining. The estimate uses the average variable rate in February 2026; Canstar put the combined increase from all five rate rises at A$532 a month. These are modeled figures, and actual repayments depend on lender decisions and loan terms.
In an Oct. 21 speech, RBA Deputy Governor Andrew Hauser called the inflation outlook “materially worse” than the bank’s August projection; EconoTimes previously reported on his warning. The RBA’s next board meeting is scheduled for Dec. 7-8, with the decision due Dec. 7 at 10:30 p.m. ET (Dec. 8 at 03:30 UTC), converted from the bank’s published time of 2:30 p.m. AEDT on Dec. 8.