Australia raises cash rate to 4.85% as inflation outlook worsens

Australia's central bank raised its cash rate target by a quarter of a percentage point to 4.85% on November 3, 2026, after revising its inflation outlook materially higher. Six Monetary Policy Board members supported the increase and three preferred to keep the target at 4.60%, according to the official decision.

The new target takes effect on November 4. Market Index independently reported the decision as the fifth increase of 2026 and the highest cash rate in 18 years.

Why the outlook changed

The Reserve Bank of Australia said inflation was broadly based. Its assessment combined higher fuel and other commodity prices with domestic capacity pressures that appeared a little tighter than previously estimated. It now expects inflation to reach the top of its 2%–3% target range only in late 2027, about three quarters later than previously forecast.

The bank also described an economy already losing momentum: housing prices have fallen, unemployment has risen and earlier increases have tightened financial conditions. Those observations explain the difficult trade-off facing policymakers. More expensive credit can restrain demand, but it does not directly produce more fuel or remove supply bottlenecks.

The split vote records disagreement about the appropriate setting at this meeting. It does not establish a timetable for either another increase or a future cut. The board said incoming information would guide its decisions.

The cash rate is an overnight money-market target, rather than a universal rate charged on every household or business loan. Any change to a particular customer's borrowing or savings rate depends on that product and its provider.

Production note: This original brief was researched and written with AI assistance for The Daily Blend Editorial, using the linked sources.

What to watch

The RBA lists December 8, 2026, as its next rate update. That announcement will provide the next scheduled decision on the target; November's increase should not be read as a commitment to a predetermined path.