Reserve Bank of Australia raises its cash rate to 4.85%, an 18-year high

The Reserve Bank of Australia increased its benchmark interest rate by 25 basis points to 4.85% on November 3, its fifth hike of 2026.

The decision passed in a 6–3 vote as policymakers continued efforts to control inflation, which reached 4.3% in September. The cash rate is now at its highest level since 2008, CNBC reports.

The latest statement drops a line from September's that the board would raise the rate further "if needed." It now says the board will do "what it considers necessary to bring inflation sustainably back to target," and that the revised outlook and "continuing upside risks" warranted further tightening.

The bank's staff forecasts for inflation were "revised materially higher," partly because of higher fuel prices tied to the conflict in the Middle East.

Inflation is expected to remain above 3% until late 2027, about three quarters longer than previously forecast, before reaching the midpoint of the RBA's 2%–3% target range in mid-2028. Annual consumer price inflation rose to 4.3% in September from 4% in August.

The board also says the economy is slowing, housing prices have fallen significantly, and the unemployment rate has risen. It expects unemployment to rise more than it forecast in August.

The Australian dollar was down 0.2% at 69.83 U.S. cents. The 2-year Australian government bond yield fell from 4.95% to 4.91%, as of 10:48 p.m. ET on Monday.

The board next meets on December 7 and 8.

Sources & Further Reading

1. "Statement by the Monetary Policy Board: Monetary Policy Decision." Reserve Bank of Australia. November 3, 2026.
2. "Australia hikes rates to 18-year high to fight inflation." CNBC. November 3, 2026.
3. "Statement by the Monetary Policy Board: Monetary Policy Decision." Reserve Bank of Australia. September 29, 2026.
4. "In Brief: Statement on Monetary Policy – November 2026." Reserve Bank of Australia. November 3, 2026.