The Reserve Bank of Australia (RBA) lifted its cash rate to 4.85% on Tuesday, Nov. 3, extending its 2026 tightening cycle as inflation and its projected path remained above the bank’s target.
The Monetary Policy Board split six to three: six members backed the quarter-point increase and three favored keeping the rate at 4.60%. The new target takes effect Nov. 4, marking the fifth increase this year. RBA rate history shows it is the highest level since 2008.
The Australian Bureau of Statistics said consumer prices rose 4.3% in the 12 months to September, compared with 4% in August. Trimmed mean inflation, which smooths out some price movements, was 3.6%, up from a revised 3.5% a month earlier.
The RBA’s revised outlook puts inflation at the top of its 2% to 3% target range in late 2027, roughly three quarters later than its earlier projection. The bank expects price growth to stay above 3% over the coming year.
In its explanation, the RBA pointed to limits on domestic capacity and rising prices for technology-related goods as AI investment grows. It also linked higher fuel and commodity costs to the Middle East conflict. The bank expects higher rates and a softer housing market to slow household purchases and residential investment.
The cash rate guides overnight unsecured lending between banks and can influence mortgage and deposit rates, the RBA says. Canstar estimates that, if lenders pass on the full increase, monthly repayments on a modeled A$700,000 owner-occupier loan would rise by A$107. Its estimate for all five increases this year is A$532 more per month.
Canstar’s calculation assumes principal-and-interest payments, an average variable rate and 25 years remaining on the loan at the start of 2026. Borrowers’ actual costs will depend on lender decisions and loan terms. EconoTimes previously covered the rate increase and higher inflation outlook.
The RBA’s next policy decision is scheduled for Dec. 7 at 10:30 p.m. ET (Dec. 8 at 03:30 UTC).