RBA Raises Cash Rate to 4.85 Per Cent in 6 to 3 Vote on 3 November 2026
The Reserve Bank of Australia Monetary Policy Board has raised the cash rate target. At its meeting on Tuesday 3 November 2026, the Board decided to increase the cash rate target by 25 basis points to 4.85 per cent.
The decision was not unanimous. Six members voted for the increase to 4.85 per cent. Three members voted to leave the cash rate target unchanged at 4.60 per cent.
This is the decision outcome. It follows our earlier watch piece on the November 3 meeting, which covered the run up to the decision.
What the Board decided
The Board increased the cash rate target by 25 basis points, from the 4.60 per cent target that the three dissenting members voted to keep unchanged, to 4.85 per cent. It said it is "focused on its mandate to deliver price stability and full employment."
Why the Board acted: inflation elevated and broadly based
The Board's explanation starts with inflation. It said: "Inflation remains elevated and recent data indicate that it is broadly based."
The outlook has also moved against the Board's earlier expectations. The Board said the inflation outlook "has also been revised materially higher in the updated staff forecasts." It said inflation "is now expected to remain above 3 per cent for the coming year and there is an increasing risk that higher inflation expectations will become embedded."
It also said inflation "is now forecast to remain elevated through much of 2027 and is not expected to reach the top of the 2 to 3 per cent target range until late 2027, around three quarters later than previously forecast."
The Board named several forces behind the higher outlook: higher fuel and other commodity prices affected by the conflict in the Middle East, domestic capacity pressures judged to have been a little tighter than earlier thought, AI related investment driving rapid growth in prices for technology related goods, and inflation in many goods and services remaining high.
The Board tied those reasons directly to its decision. It said: "Given the revised inflation outlook and the continuing upside risks, the Board judged that a further tightening in financial conditions is warranted to support the return of inflation to target." It added: "The Board will continue to do what it considers necessary to bring inflation sustainably back to target."
The inflation background: CPI at 4.3 per cent
The Australian Bureau of Statistics reported that the Consumer Price Index rose 4.3 per cent in the 12 months to September 2026, up from 4.0 per cent in the 12 months to August 2026. Trimmed mean annual inflation was 3.6 per cent in September 2026.
Trimmed mean annual inflation in August 2026, as released last month, was 3.6 per cent, but a change in seasonal factors has seen that revised down to 3.5 per cent. Both the headline figure of 4.3 per cent and the monthly trimmed mean figure of 3.6 per cent sit above the top of the 2 to 3 per cent target range.
Housing was the largest contributor to annual inflation in September 2026, rising by 5.2 per cent, reflecting rising costs for both New dwellings and Electricity. New dwelling prices rose 4.7 per cent in the 12 months to September 2026, down from 5.4 per cent in the 12 months to August 2026.
Transport was the second largest contributor, rising by 8.7 per cent, due to higher automotive fuel prices. On a monthly basis, automotive fuel prices rose 9.4 per cent in September 2026, compared with a rise of 14.8 per cent in August 2026, driven by higher world oil prices.
The September quarter 2026 quarterly movement for the CPI was 1.3 per cent and for the Trimmed mean (pre-October 2025 basis) was 1.0 per cent. Those are quarterly movements, not annual figures, and they should not be mixed up with the annual trimmed mean figure of 3.6 per cent above.
What the Board also acknowledged: a slowing economy
The Board did not present the decision as cost free. It said: "The economy is slowing, housing prices have fallen significantly and the unemployment rate has risen." It also said higher interest rates and falls in housing prices and turnover are expected to weigh on growth in dwelling investment and household consumption.
What comes next: no commitment, data to guide decisions
The statement gives no commitment about the next move. That is a description of what the statement contains, not a quote from it. What the Board did say is that it "will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions" and that monetary policy "is well placed to respond to developments." The next decision is left open, to be shaped by what the data shows.
What this means for mortgage holders: scenarios, not predictions
This section describes scenarios only. It is general information, not financial advice, and it does not predict what will happen to any individual loan. This article does not state what any lender will do, and it gives no repayment figures, because no lender announcement and no repayment calculation is part of the verified record for this story.
Scenario one: no change to your loan. If the rate on your loan does not change, your repayment position stays as it is.
Scenario two: a rise in your loan rate. If the rate on your loan rises, the repayment amount changes with it, by an amount that depends on the details of that individual loan. This article does not put a figure on it. The defining questions are specific to each household: what rate applies to the loan, what repayment amount is shown for that loan, and when any change applies to that loan.
Scenario three: pressure from both directions. A household can face higher living costs and a higher loan rate at the same time. Headline inflation at 4.3 per cent describes cost pressure in the year to September 2026, while the Board's decision raises the cash rate target that frames borrowing conditions. This is a scenario to understand, not a prediction about any household.
The anchor facts are the 4.85 per cent target, the 6 to 3 vote, and the Board's stated reason: elevated, broadly based inflation with a materially higher revised outlook.
Frequently Asked Questions
What did the RBA decide on 3 November 2026?
The Board decided to increase the cash rate target by 25 basis points to 4.85 per cent.
What was the vote?
Six members voted for the increase to 4.85 per cent. Three members voted to leave the target unchanged at 4.60 per cent.
Why did the Board raise the cash rate target?
Because inflation remains elevated and broadly based, and the outlook has been revised materially higher, with inflation expected to remain above 3 per cent for the coming year.
What was inflation before the decision?
The Consumer Price Index rose 4.3 per cent in the 12 months to September 2026. Trimmed mean annual inflation was 3.6 per cent in September 2026.
When does the Board expect inflation to return to the top of its target range?
Not until late 2027, around three quarters later than previously forecast. Inflation is expected to remain elevated through much of 2027.
What did the Board say about the economy?
"The economy is slowing, housing prices have fallen significantly and the unemployment rate has risen." Higher interest rates and falls in housing prices and turnover are expected to weigh on dwelling investment and household consumption.
Did the Board commit to a next move?
No commitment about the next move appears in the statement. The Board said it will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions.
What does the decision mean for my mortgage?
This article gives no repayment figure and states nothing about what any lender will do. Either the rate on your loan stays as it is, or it rises, which would change the repayment amount for that loan by an amount that depends on that loan's own details. This is general information only, not financial advice.
This article reports the Reserve Bank of Australia Monetary Policy Board decision of 3 November 2026 and the Australian Bureau of Statistics Consumer Price Index figures for September 2026. Nothing here is financial advice.
