Reserve Bank of Australia raises its cash rate by 25 basis points to 4.85%

The Reserve Bank of Australia’s Monetary Policy Board raised its cash rate target by 25 basis points to 4.85 per cent at its meeting on 3 November 2026. The decision was by majority: six members voted for the increase and three voted to leave the rate unchanged at 4.60 per cent.

Why the Board says it moved

The statement says inflation remains elevated and broadly based, and that the updated staff forecasts revise the inflation outlook materially higher. The Board points partly to higher fuel and other commodity prices affected by the conflict in the Middle East, and partly to domestic capacity pressures that it now judges a little tighter than earlier thought. It also notes that AI-related investment is driving rapid growth in prices for technology-related goods.

Inflation is now forecast to stay above 3 per cent for the coming year and is not expected to reach the top of the 2–3 per cent target range until late 2027, around three quarters later than previously forecast. The Board says this presents upside risks to inflation expectations, and that there is an increasing risk higher expectations will become embedded.

The economy

The Board says the rate increases since the start of the year have tightened financial conditions: the economy is slowing, housing prices have fallen significantly and the unemployment rate has risen. Its forecasts see output growth slowing further over the coming year, while business investment, including data centre-related investment, is forecast to be stronger in the near term. The unemployment rate is projected to rise by more than expected in the August forecasts.

What it means for traders

For anyone trading the Australian dollar or Australian rates, the decision and the split vote are now the reference points. The Board did not commit to a path: it says it will be attentive to the data and the evolving assessment of the outlook and risks, and will continue to do what it considers necessary to bring inflation sustainably back to target. The full staff forecasts are in the RBA’s Statement on Monetary Policy, published alongside the decision.