In brief
The Reserve Bank of Australia (RBA) raised its cash rate target by 0.25 percentage point to 4.85% on 3 November 2026, marking an 18‑year high and the fifth rate increase this year. Inflated costs, especially fuel and commodity prices, are pushing inflation above the bank’s 2‑3 % target, prompting a 6‑3 vote on the rate hike. The decision signals the RBA’s intent to contain inflation through much of 2027, although the role of the Middle‑East conflict and domestic capacity pressures remains uncertain.
On Tuesday, 3 November 2026, the Reserve Bank of Australia (RBA) increased its cash rate target to 4.85 %, an 18‑year high, as a response to persistent inflationary pressures driven in part by higher fuel and commodity prices linked to the conflict in the Middle East.
According to Xinhua, the Monetary Policy Board decided at a two‑day meeting to lift the cash rate by 25 basis points, following four earlier 0.25‑point increases in February, March, May and September, bringing the rate to its highest level since 2008.
The 4.85 % level follows official figures released on 28 October that showed annual inflation rising from 4.0 percent in August to 4.3 percent in September, with annual trimmed‑mean inflation—the measure the RBA closely watches—increasing from a revised 3.5 percent to 3.6 percent.
The RBA’s target for annual inflation remains 2‑3 percent, and the board stated that inflation is expected to remain elevated throughout much of 2027 and will not return to the top of the target band until late 2027.
In its statement, the board also warned that the unresolved conflict in the Middle East poses further risks to inflation and economic growth, with global oil supply disruptions continuing to push up energy prices.
Board members voted 6‑3 in favour of the rate increase, with six members supporting the rise and three opposing a maintenance of the 4.60 percent level.
The decision comes amid market expectation that the RBA would raise its cash rate to 4.85 percent, as noted by ABC News, which reported that the interest rate setting board was today widely expected to lift the cash rate to an 18‑year high.
News.com.au reported that the hike lifted the official cash rate from 4.60 percent to 4.85 percent, marking the fifth rate rise in 2026 and the highest level in 18 years.
The RBA’s Monetary Policy Board will meet in early December to consider whether to adjust the cash rate further.
The bank noted that domestic capacity pressures appear stronger than previously estimated, and higher fuel prices are increasingly being passed on to other goods and services.
While the decision reflects a consensus on the need to curb inflation, uncertainties remain regarding the durability of the current inflation trend, the long‑term impact of the Middle‑East conflict on commodity prices, and the pace at which domestic capacity constraints will ease.