The Reserve Bank of Australia raised the cash rate by 25 basis points to 4.85% on 3 November 2026, its fifth increase this year. Three of nine board members preferred to hold, and new staff forecasts show headline inflation peaking at 4.5% at the end of 2026.
Global Economy Charts Research Desk | November 3, 2026
Key indicators
| Indicator | Reading | Context |
|---|---|---|
| Cash rate target | 4.85% | +25bp; previous 4.60%; effective 4 November |
| Board vote | 6-3 | Three members voted to hold at 4.60% |
| CPI, September (monthly) | 4.3% y/y | August: 4.0% |
| Trimmed mean, Q3 2026 | 3.7% y/y | +1.0% q/q; target band 2-3% |
| Unemployment, September | 4.7% | Up 0.1pt; trend 4.6% |
The decision was widely expected after the September-quarter inflation data on 28 October. Markets priced a high probability of a move, and all four major Australian banks had forecast one. What stands out is the split vote and the size of the upward revision to the RBA’s own inflation outlook in the November Statement on Monetary Policy, published alongside the decision.
1. A fifth increase, and a divided board
The 25 basis point rise takes the cash rate target to 4.85%, its highest in about 18 years. It follows increases in February, March, May and September, reversing the three cuts made in 2025, when the rate fell from 4.35% to 3.60%. Six members voted to raise rates and three preferred to keep them at 4.60%. A split of that size signals that the board does not regard further tightening as automatic, even though the statement described inflation as elevated and broadly based.
2. Why the RBA moved
The board cited a material upward revision to the staff inflation outlook, partly reflecting higher fuel and commodity prices linked to the Middle East conflict. It also judged capacity pressures to be a little tighter than previously thought, noted that AI-related investment is lifting prices of technology goods, and said firms in its liaison programme report passing cost increases on to customers. Some measures of inflation expectations have risen. The September-quarter data supported that reading: headline CPI rose 1.3% on the quarter and trimmed-mean inflation 1.0%, taking the annual rates to 3.9% and 3.7%. The monthly measure reached 4.3% in September.
3. The forecasts behind the decision
The November forecasts have headline inflation peaking at 4.5% in the December quarter of 2026 and trimmed-mean inflation at 3.6%. Underlying inflation is not expected to return to the top of the 2-3% target band until late 2027, about three quarters later than in the August forecasts, and to reach the 2.5% midpoint only around mid-2028. These projections assume a cash rate path roughly 50 basis points higher than in August, peaking at about 4.9% in mid-2027.
4. The costs are becoming visible
The statement acknowledged the other side of the ledger. Economic growth is slowing, house prices have fallen significantly and unemployment has risen. Staff forecast GDP growth of 1.6% over 2026 and 1.3% over 2027, with the unemployment rate rising from 4.7% to 5.1% by the end of 2028. The three dissenting votes suggest that some members already see those costs as a reason to wait for previous increases to take effect.
Scenarios to watch
If monthly inflation stays above 4% into the December quarter, as the RBA forecasts, markets are likely to keep pricing a further increase in 2027. A faster rise in unemployment, or a fall in fuel prices, would strengthen the case of the three members who voted to hold. These are scenarios for monitoring, not forecasts.
Sources and methodology
RBA, Statement by the Monetary Policy Board, 3 November 2026; RBA, Statement on Monetary Policy, November 2026: Outlook; RBA, cash rate target history; RBA, measures of consumer price inflation; ABS, CPI rose 4.3% in the year to September 2026; ABS, Labour Force, September 2026; ABC News, 3 November 2026. Reported figures are distinguished from forecasts and GEC calculations. Charts use the values and units shown; scales start at zero except where negative values or index thresholds require otherwise. Interpretive sections are GEC analysis, not company or central-bank forecasts.
Thumbnail: AI-generated editorial illustration. Figures are rounded for readability; some releases may be preliminary or subject to revision.
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