The Bottom Line
Updated Thursday 5 November 2026
The Reserve Bank of Australia said its Monetary Policy Board voted six to three on 3 November to raise the cash rate target by 25 basis points to 4.85 per cent. The cash rate has now risen five times this year, from 3.60 per cent in January to 4.85 per cent, a gain of 1.25 percentage points. The RBA said inflation is now expected to remain above 3 per cent for the coming year and will not return to the top of the 2 to 3 per cent target band until late 2027, around three quarters later than previously forecast.
ABS figures show the trimmed mean CPI, the RBA's preferred measure of underlying inflation, rose to 3.7 per cent in the September quarter 2026, and headline CPI has also remained elevated; the trimmed mean has been above the top of the 2 to 3 per cent band in every quarter since December 2025, after briefly dipping inside the band in mid-2025.
MacroBusiness argues the 6-3 board split signals a dovish shift and that the RBA may be done tightening, pointing to a materially higher unemployment forecast. Tim Toohey of Yarra Capital Management, writing via MacroBusiness, argues the RBA is misdiagnosing inflation as excess private demand when pressure is increasingly from government-funded sectors and global fuel prices. CBA's head of Australian economics, Belinda Allen, has cut the bank's 2027 GDP growth forecast to a level CBA says would constitute another per capita recession, according to MacroBusiness.
The four major banks announced increases to variable home loan rates following the RBA decision, effective 13 November, according to ABC News.
Every figure is checked against official data or attributed to the body that announced it. Past editions