Australia’s Central Bank Lifts Rates to 4.85% in Fifth Hike of 2026
Direct answer: On November 3, 2026, the Reserve Bank of Australia raised its cash rate target by 0.25 percentage points to 4.85%. That is the fifth rate rise of 2026, and the highest cash rate in Australia since 2008. The new rate took effect on November 4, 2026.
What happened
The Reserve Bank of Australia, known as the RBA, is Australia’s central bank. Its Monetary Policy Board sets the cash rate, which is the interest rate banks charge each other for overnight loans. That rate helps set borrowing costs across the economy.
The Board voted six to three to raise the rate from 4.60% to 4.85%. Six members voted for the rise, and three voted to leave the rate unchanged at 4.60%. The RBA said inflation remains elevated and broadly based, meaning price rises are spread across many goods and services, not just a few items.
The RBA also raised its inflation forecast. It now expects inflation to stay above 3% for much of the coming year, and not to reach the top of its 2% to 3% target range until late 2027. That is about three quarters later than it forecast in August. The RBA pointed to higher fuel prices linked to the Middle East conflict, and to tighter capacity pressures at home.
This rise follows earlier hikes in February, March, May, and September 2026. The cash rate started 2026 at 3.60%, so it has now risen by 1.25 percentage points this year. The decision came after Australian inflation rose to 4.3% in the year to September 2026, up from 4.0% in August, as covered in our earlier post on Australia’s September inflation.
Reuters reported the decision on November 3, 2026, noting that the Australian dollar fell about 0.3% to $0.6977 after the announcement, as markets read the split vote as a sign that policymakers may be nearing the end of this tightening cycle.
Why it matters for beginners
Think of the cash rate as the base cost of borrowing money in Australia. When the central bank raises it, banks often pass the rise on to variable home loans, personal loans, and business loans. That makes borrowing more expensive, which can slow spending and cool price rises over time.
For savers, higher rates can mean better returns on savings accounts and term deposits, though banks do not always pass on the full rise straight away. For borrowers, a higher rate can mean higher monthly repayments. For example, reports after the decision said repayments on a $750,000 home loan could rise by around $120 a month if lenders pass the rise on in full.
The split vote matters too. When three of nine Board members vote to hold rates, it shows that even inside the central bank there is debate about how much more tightening the economy can handle, especially as housing prices have fallen and unemployment has risen. Unemployment rose to 4.7% in September 2026.
What to watch next
The RBA’s next decision is due on December 8, 2026. Before then, watch for the October jobs figures on November 19 and the monthly inflation figures for October on November 25. Those numbers will help shape whether the Board holds rates in December or raises them again.
Also watch what the major banks do. After the September rise, the big four banks passed the increase on in full. Whether they do the same after this rise, and how quickly, will decide how soon households feel the change.
FAQ
What is the cash rate?
The cash rate is the interest rate set by the Reserve Bank of Australia. It guides short term interest rates across the economy, including many loan and savings rates.
Why did the RBA raise rates again?
Because inflation is still too high and is taking longer to fall than expected. The RBA said inflation remains broadly based and its outlook has been revised materially higher.
Does a rate rise help savers?
It can, because savings rates often rise when the cash rate rises. But the gain is not automatic, and it depends on each bank’s decision.
What happens next?
The next RBA decision is on December 8, 2026. The Board has said it will continue to do what it considers necessary to bring inflation sustainably back to target, and that future decisions will depend on incoming data.
