Rate Increase
The Reserve Bank of Australia increased the cash rate target by 25 basis points to 4.85 per cent on 3 November 2026. Six board members voted for the rise; three favoured holding at 4.60 per cent. The decision followed revised forecasts showing inflation staying above 3 per cent through much of 2027 and not reaching the 2-3 per cent target band until late 2027.
Rationale and Risks
The Board cited broadly based inflation, tighter capacity pressures, and pass-through from higher fuel prices. AI-related investment and Middle East conflict effects on commodities contributed to the revised outlook. The majority judged further tightening necessary to prevent embedded inflation expectations, despite slowing growth, falling housing prices, and rising unemployment.
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