The Reserve Bank of Australia raised its cash rate target by 25 basis points to 4.85% on Nov. 3, the fifth increase this year and the highest setting since 2008.
The decision was not unanimous. Six Monetary Policy Board members voted for the increase and three preferred to leave the rate at 4.60%. That split matters because the RBA simultaneously made its inflation outlook worse while giving markets less confidence that another near-term hike is automatic.
| Nov. 3 RBA decision | New reading |
|---|---|
| Cash rate target | 4.85%, up 25 bp |
| Vote | 6–3 for a hike |
| 2026 hikes | Five |
| Inflation outlook | Above 3% through end-2027; midpoint of target around mid-2028 |
| Growth | Expected below trend as tighter policy and weaker housing bite |
The bigger change is the inflation horizon
The RBA says recent inflation is broad-based and that higher global fuel prices are not the only problem. Domestic prices and costs are also increasing too quickly, while the Bank is increasingly concerned that inflation expectations could become embedded.
Its November forecasts now keep headline and underlying inflation above 3% until the end of 2027 and do not return inflation to the midpoint of the 2%–3% target range until roughly mid-2028. That pushes the normalization story materially further out.
Why the 6–3 split matters
A split vote after five hikes suggests the Board is balancing two increasingly visible risks: inflation that is taking longer to cool and an economy already absorbing much tighter financial conditions. The RBA also expects unemployment to rise further even as employment continues to grow.
The Australian dollar weakened after the decision in early market trading, consistent with investors reading the statement as less hawkish than the rate increase itself. The key question for December is therefore not whether 4.85% is restrictive—it clearly is—but whether incoming inflation data force the minority of hold voters back toward another increase.
Global rates implication
Australia adds another example of the 2026 global inflation shock forcing central banks to keep policy tighter for longer. The RBA explicitly cites the Middle East energy shock and resilient demand, including AI-related investment, as part of the global backdrop. For cross-asset investors, that keeps the distinction between countries with sticky inflation and countries closer to policy stabilization important.