In brief
On 3 November 2026 the Reserve Bank of Australia (RBA) lifted its cash rate target to 4.85%, marking an 18‑year high. The move followed four earlier 0.25‑percentage‑point increases this year and was driven by higher inflation driven by fuel and commodity prices. The RBA’s Monetary Policy Board, which met with a 6‑3 majority, cautioned that inflation would remain above target until late 2027 and highlighted risks from the ongoing Middle East conflict.
On 3 November 2026, the Reserve Bank of Australia (RBA) raised its benchmark cash rate to 4.85%, the highest level in 18 years, according to statements issued by the bank’s Monetary Policy Board.
The decision was reached by a 6‑3 majority of the Board, with six members voting to lift the cash rate target by 0.25 percentage point and three members voting to leave the rate unchanged at 4.60 percent.
4 uration: The increase brings the cash rate to a level that has not been seen since 2008. This marks the fifth 0.25‑percentage‑point rise of 2026, following similar hikes in February, March, May and September.
Inflation data released on 28 October showed that annual headline inflation rose from 4.0 percent in August to 4.3 percent in September. The trimmed‑mean measure of underlying inflation, which excludes the most volatile items, climbed from a revised 3.5 percent to 3.6 percent. The RBA’s inflation target remains 2‑3 percent a year.
In its decision statement the Monetary Policy Board noted that higher fuel and commodity prices—linked to uncertainty in the Middle East—were keeping inflation above target. "The Middle East conflict remains unresolved," the Board added, "and there are scenarios where inflation is higher and activity lower than forecast." The statement highlighted that global oil‑supply disruptions are maintaining upward pressure on energy prices and that prolonged uncertainty could keep growth subdued both overseas and in Australia.
Treasurer Jim Chalmers reacted to the rise, saying it was "putting sustained upward pressure on inflation." "It’s weighing on growth, and its end can’t come soon enough for the global economy or for Australians facing cost‑of‑living pressures," Chalmers said.
Michele Bullock, chair of the Monetary Policy Board and RBA Governor, told reporters that those who voted to keep the rate on hold had weighted more heavily the downside risks to inflation, including the ongoing housing downturn, rising unemployment and stagnant wage growth.
The RBA expected inflation to remain elevated through much of 2027, not returning to the top of the target range until late 2027. The board indicated it would reconvene its final meeting of 2026 in early December to discuss any further adjustments to the cash rate.
With the rate now at 4.85 percent, the RBA’s policy stance signals a willingness to tolerate the short‑term pain of higher borrowing costs in order to bring inflation back toward its target range. The decision underscores the central bank’s assessment that the risks from the Middle East conflict and commodity price shocks remain sufficiently large that tighter policy is warranted for the foreseeable future.