September 2026
The Reserve Bank of Australia (RBA) Board decided to raise the cash rate by 25bp to 4.85% at its November meeting, following September’s hike to 4.60%.
The move was in line with expectations after firmer September quarter inflation, taking the cash rate to its highest level since 2008 and marking the fifth hike of 2026.
This decision also follows a rate hike at the US Federal Reserve’s September meeting, where expectations have also shifted from rate cuts to hikes over the next few months.
Key changes from the September statement were as follows:
- Inflation framing – the Board now describes inflation as broadly based, with forecasts revised materially higher. Inflation is not expected to be inside the target band until late 2027, around three quarters later than previously forecast.
- Inflation expectations – upgraded from ‘elevated’ to an increasing risk that higher expectations become embedded, now the key justification for the hike.
- Labour market – the unemployment rate has risen and is expected to rise more than forecast in August.
- Demand – more downbeat, with the economy slowing and housing prices falling significantly from their highs, whilst business investment, including data centres, remains strong.
- Global – largely unchanged, with A.I.-related investment still offsetting the conflict’s drag and weak productivity constraining potential growth in Australia.
- Forward guidance – the explicit reference to further rate increases has been dropped in favour of a general data-dependent stance.
The decision was split 6–3, with three members preferring to hold, a marked break from the unanimous September result. Together with the softer guidance, this suggests the bar for further hikes has risen.
Following the announcement, Australian government bond yields fell (prices higher), the AUD/USD fell slightly, and Australian equities moved higher, implying investors might be hopeful the RBA is now done.
This information is general advice and does not take account of investors’ objectives, financial situation or needs. Before acting on this general advice, investors should therefore consider the appropriateness of the advice having regard to their objectives, financial situation or needs.
