What did the RBA decide?

At its meeting on 2–3 November, the RBA’s Monetary Policy Board lifted the cash rate target by 25 basis points (0.25 percentage points) to 4.85 per cent, effective Wednesday 4 November 2026. The previous rate was 4.60 per cent, set in late September.

It is the fifth rise this year. The RBA’s cash rate table shows increases in February (to 3.85 per cent), March (4.10), May (4.35), September (4.60) and November (4.85), with holds in June and August. That more than reverses three cuts in 2025. ABC News describes the new level as an 18-year high.

The vote was 6–3, with three members preferring to hold at 4.60 per cent, a sign of the trade-off between inflation running too hot and an economy that is already slowing.

Why did the RBA raise rates again?

The Board’s statement says that “inflation remains elevated and recent data indicate that it is broadly based”: price rises are no longer confined to volatile items such as fuel.

The RBA also revised its inflation forecasts materially higher. It attributed part of that to fuel and commodity prices linked to conflict in the Middle East, and part to the domestic economy having less spare capacity than previously thought. It now does not expect inflation to return to the top of its 2–3 per cent target range until late 2027, about three quarters later than it forecast in August.

It also warned of the risk that people and businesses come to expect high inflation and set wages and prices accordingly, citing “an increasing risk that higher inflation expectations will become embedded”.

The RBA acknowledged that earlier rises have tightened financial conditions, the economy is slowing, housing prices have fallen significantly and unemployment has risen. It did not commit to further moves, saying it will remain data-dependent and “will continue to do what it considers necessary” to bring inflation back to target sustainably.

What the RBA’s new forecasts show

The RBA’s November 2026 Statement on Monetary Policy, with forecasts finalised on 28 October, sets out the path the bank expects (year-ended figures):

Period	GDP growth	Unemployment rate	Headline CPI	Trimmed mean	Cash rate assumption
Dec 2026	1.6%	4.7%	4.5%	3.6%	4.7%
Jun 2027	1.6%	4.8%	3.7%	3.5%	4.9%
Dec 2027	1.3%	4.9%	2.7%	2.9%	4.8%
Jun 2028	1.3%	5.0%	2.5%	2.5%	4.8%

Headline inflation is expected to peak around the end of this year, and unemployment to climb to about 5 per cent by mid-2028. The RBA’s plain-English summary says inflation is not expected to reach the middle of the target range until mid-2028.

The cash rate assumption is not a promise; it reflects market pricing when the forecasts were finalised.

What’s happening with inflation?

The ABS monthly Consumer Price Index rose 4.3 per cent in the 12 months to September 2026, up from 4.0 per cent in August. Prices rose 0.8 per cent in September alone. The trimmed mean, a measure of underlying inflation that strips out the largest price swings, was 3.6 per cent, up from a revised 3.5 per cent.

Housing was the largest contributor, with the housing group up 5.2 per cent over the year, including higher new dwelling prices and electricity. Transport was next, up 8.7 per cent, driven by automotive fuel, which jumped 9.4 per cent in September after a 14.8 per cent rise in August. The ABS attributed the fuel increases to higher world oil prices.

The gap between headline and trimmed mean inflation shows how much fuel is lifting the headline figure, but even the underlying measure is well above target. (A separate VNN explainer covers how the monthly CPI works.)

What does the rate rise mean for mortgage holders?

How quickly will repayments go up?

Banks set their own variable rates, but they usually move in step with the cash rate. ABC News reported on 4 November that ANZ, CBA, NAB and Westpac each announced 0.25 percentage point increases to variable home loan rates, applying from 13 November. Macquarie Bank moved within an hour of the RBA’s announcement, with its higher rates applying from 19 November, according to the ABC.

Fixed-rate borrowers are not affected until their fixed term ends.

Illustrative arithmetic (general information, not advice)

The following VNN calculations use a standard 30-year principal-and-interest loan of $500,000 and are illustrative only. Actual changes depend on each borrower’s rate, balance, remaining term and lender.

• This rise alone: if a variable rate goes from 6.25 to 6.50 per cent, the monthly repayment rises from about $3,079 to about $3,160, an increase of roughly $82 a month, or about $980 a year.
• This year’s five rises combined: if a rate had gone from 5.25 to 6.50 per cent over 2026, the monthly repayment would have risen from about $2,761 to about $3,160, roughly $400 a month more.

ANZ’s own estimate, reported by the ABC, is that the latest rise adds about $79 a month on a $500,000 owner-occupier principal-and-interest variable loan. The small difference from VNN’s figure reflects different starting rates and loan assumptions.

Smaller balances mean smaller dollar changes, and borrowers paying above the minimum may not see their required repayment change. Westpac told the ABC that most of its customers were ahead on their repayments, which gives some households a buffer.

What about savers?

A higher cash rate should mean higher deposit returns, but pass-through to savers is often slower and less complete. The ABC reported banks were lifting savings rates from mid-month, but have been slower to pass rises on to savers than to borrowers.

Many of the highest advertised savings rates carry conditions, such as making a minimum deposit each month or not making withdrawals. Canstar, quoted by the ABC, says customers who do not meet those conditions can fall back to a base rate of around 0.10 per cent. Industry outlet Australian Broker reports that Macquarie Bank and Teachers Mutual Bank are passing the rise on to savings rates in full, from 19 November and (mostly) 12 November respectively.

As a rough guide, a full 0.25 percentage point rise adds about $25 a year in interest for every $10,000 held in savings, before tax. For savers, the larger question is whether their account is earning more than inflation: with headline CPI at 4.3 per cent, many accounts will not be.

What does it mean for renters and households?

Renters are not directly affected by the cash rate, but higher costs for investors with variable loans, and slower new building, can feed into rents over time. How much depends on local supply and demand.

More broadly, the RBA is deliberately slowing spending to ease price pressures. The ABS national accounts show the economy grew 0.4 per cent in the June quarter 2026 and 2.1 per cent over the year. The household saving ratio edged up from 6.4 to 6.5 per cent. The RBA expects growth to slow further over the coming year.

The labour market is also softening. The unemployment rate rose to 4.7 per cent in September 2026 (seasonally adjusted), with employment falling by 39,000 people and the participation rate down 0.2 percentage points to 66.8 per cent. The ABS noted possible residual effects from survey changes in the seasonally adjusted data and recommends trend figures, which showed unemployment steady at 4.6 per cent.

That is the tension in the Board’s 6–3 vote: rates high enough to bring inflation down risk pushing more people out of work.

What happens next

Several data releases will shape the RBA’s next decision:

• Thursday 19 November 2026: ABS Labour Force figures for October.
• Wednesday 25 November 2026: ABS monthly CPI for October.
• Wednesday 2 December 2026: ABS national accounts for the September quarter.
• 7–8 December 2026: the RBA Monetary Policy Board’s final meeting of the year, with the decision expected on Tuesday 8 December.

The first 2027 meeting is scheduled for 8–9 February. The RBA’s forecasts assume, on late-October market pricing, that the cash rate stays near current levels through 2028, which could change quickly if inflation or unemployment surprise.