In brief
On Tuesday, the Reserve Bank of Australia increased its cash rate target to 4.85%, an 18‑year high, after four earlier hikes in 2026. Inflation data, driven by higher fuel and commodity prices amid a Middle‑East conflict, prompted the move. The Monetary Policy Board voted 6‑3 and will meet again in December to consider another adjustment.
On Tuesday, the Reserve Bank of Australia (RBA) lifted its cash rate target to 4.85 percent, the highest level since 2008, after a 0.25‑percentage‑point increase that marked the fifth rise this year. The decision was taken at a two‑day Monetary Policy Board meeting in Sydney.
The RBA’s new rate of 4.85 percent follows earlier 0.25‑point hikes in February, March, May and September, which had moved the key interest rate from 4.60 percent to its current level. The five increases in 2026 underscore the central bank’s emphasis on containing inflation.
Official price‑inflation statistics released on October 28 show that annual inflation rose from 4.0 percent in August to 4.3 percent in September, while trimmed mean inflation – a core measure closely watched by the RBA – climbed from a revised 3.5 percent to 3.6 percent. These figures feed the RBA’s target range of 2‑3 percent.
In its decision statement, the board cited persistent inflation pressures that it links partly to higher fuel and commodity prices. The ongoing conflict in the Middle East, it said, continues to disrupt global oil supplies and push energy costs higher, which in turn lifts the prices of other goods and services.
The Monetary Policy Board noted that domestic capacity pressures appear stronger than previously estimated, and that higher fuel prices are increasingly being passed on to other sectors of the economy.
The decision was approved by a 6‑3 majority, with six board members voting to raise the cash rate target and three voting to leave it unchanged at 4.60 percent.
The board also warned that the inflation outlook remains elevated through much of 2027 and that it would not expect the economy to return to the top of the target range until late 2027.
In addition to inflation concerns, the board highlighted the unresolved Middle‑East conflict as a risk to economic growth; disruptions to oil supplies are a continuing threat to price stability.
Following the vote, the RBA will hold its final meeting of 2026 – scheduled for early December – to consider the possibility of a further adjustment to the cash rate target.
Earlier this week, Australian media outlet ABC had reported that the RBA’s interest‑rate setting board was widely expected to lift the cash rate to an 18‑year high of 4.85 percent. The site’s live update also confirmed the 0.25‑percentage‑point rise from 4.60 percent to 4.85 percent, matching the decisions announced by the RBA.