The Reserve Bank of Australia (RBA) raised its cash rate target to 4.85% and lifted its projection for joblessness in 2028, linking the increase to a worsening inflation outlook.
The 25-basis-point increase takes effect Nov. 4, raising the target from 4.60%. Six members of the Monetary Policy Board voted for the move, while three favored holding the rate steady. It was the fifth increase in 2026, after rises effective Feb. 4, March 18, May 6 and Sept. 30, according to the RBA’s rate history. EconoTimes previously covered the increase and its inflation backdrop.
The RBA projects average unemployment of 4.7% for the quarter ending in December 2026, 4.8% in June 2027, 4.9% in December 2027 and 5.1% in December 2028. The final projection compares with an average of 4.8% in the bank’s August forecast. The RBA said the revised longer-term estimate partly reflects an expectation that more people will stay in the labor force or join it than previously assumed.
The Board pointed to price increases spreading across more areas of the economy, higher fuel and commodity costs amid the Middle East conflict, and capacity constraints in Australia. It also cited rising prices for technology goods, which the bank connected to investment related to artificial intelligence.
The RBA expects household spending and residential investment to weaken as interest rates rise and housing prices and turnover decline. It sees stronger near-term business investment, including spending related to data centers. The bank describes its cash rate target as a benchmark for unsecured overnight borrowing between banks, with changes influencing rates on loans and deposits.
The Board said tighter financial conditions were needed to help bring inflation back within its 2% to 3% target range. The RBA lists its next policy decision for Dec. 7 at 10:30 p.m. ET (Dec. 8, 03:30 UTC).