The bank’s fifth increase of 2026 passed by a 6–3 vote and takes the rate to its highest since 2008. Canstar estimates it will add $107 a month to payments on a $700,000 home loan.
The Reserve Bank of Australia raised its cash-rate target on 3 November from 4.6% to 4.85%, its fifth increase of 2026. Six members of its Monetary Policy Board voted for the rise and three favored holding the rate steady. The target is now at its highest since 2008.
The decision follows a jump in annual inflation to 4.3% in September, above the bank’s 2–3% target and higher than it had expected. The war in the Middle East has sustained a global oil shock, adding to inflation pressure.
Canstar estimates the latest increase will add $107 a month to payments on a $700,000 home loan, taking the combined monthly increase from this year’s five rises to $532, The Guardian said.
The cash-rate target concerns overnight lending between banks; it is not a borrower’s mortgage rate. Lenders decide whether, when and how much to change their loan rates. Variable-rate borrowers may see their payments change after a lender adjusts its rate, while a fixed-rate borrower may see no immediate change during the fixed term.
Actual repayments depend on the lender’s rate change, the loan balance, remaining term, repayment type and any offset balance. For a principal-and-interest loan, the lender generally recalculates repayments over the remaining term.
Analysis
Higher rates can curb borrowing and spending, reducing pressure on prices, but their effects take time. In October 28 remarks to a Senate committee, bank Governor Michele Bullock said global energy costs and domestic capacity pressures were keeping inflation elevated and warned that earlier rate rises had yet to have their full effect.
The bank forecasts inflation will rise further in late 2026 and fall below 3% by the end of 2027, about nine months later than previously expected. It also forecasts economic growth of 1.6% in 2026 and 1.3% in 2027, below its estimated potential growth rate of about 2%, and expects weak growth through the end of 2028.
Unemployment stands at 4.7%; the bank forecasts it will reach about 4.9% by the end of 2027 and exceed 5% in 2028. It said public demand was weaker than expected in the first half of 2026, as cost-of-living measures expired and spending on defense, disability and aged care moderated.
Before the decision, AMP chief economist Shane Oliver said home prices could fall as much as 15% before stabilizing in late 2027. He warned that a fall of that size could reduce homeowner spending and weigh on homebuilding. Recession was not his central expectation, but he estimated its risk could rise to 45% if the bank raised rates as anticipated.
The bank’s schedule puts publication of the November meeting minutes on 17 November. Its next board meeting is set for 7–8 December, with the decision due on the second day.
Some managers have been asked to find up to 20% in annual cost savings, sources say. The prospective cuts would follow layoffs across Disney this year.
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