Highlights

  • The RBA cash rate stands at 4.60% following four increases in 2026 totalling 100 basis points.
  • Headline inflation is 4.3% and underlying inflation has held around 3.5% for roughly six months.
  • Unemployment has risen to 4.6%, up from a low of 3.5%, adding tension to the employment side of the RBA mandate.
  • Mortgage repayments are near 10% of household disposable income and fewer than 2% of borrowers face a cash shortfall.

The Reserve Bank of Australia's Monetary Policy Board meets on 3 November 2026, Melbourne Cup Day, to deliver its next rate decision. The meeting follows four increases this year that took the cash rate target from 3.60% to 4.60%, and arrives with inflation still above target and employment conditions shifting. Five questions frame what the Board must weigh.

Where Inflation Stands

Headline CPI rose 4.3% over the year to September 2026 on the monthly measure. The RBA's target range is 2-3%. Underlying inflation, which strips out volatile price movements, has been around 3.5% for approximately six months according to Governor Bullock's 29 September media conference remarks. Petrol and diesel prices were running 13% above the August 2026 Statement on Monetary Policy forecasts at the time of the September Board meeting.

The Employment Picture

Unemployment has risen to 4.6%, up from a trough of around 3.5% not long ago. This rise has prompted debate within the Board. The September minutes recorded that some members raised the risk of further deterioration in the labour market as a case for holding rates. Despite the higher unemployment rate, the Board's overall assessment was that labour market conditions remained tighter than previously judged.

Household Finances Under Pressure

Scheduled mortgage payments were about 10% of household disposable income at the time of the September Board meeting, near the 2024 peak level. Fewer than 2% of owner-occupier borrowers were estimated to be facing a cash flow shortfall. Savings buffers vary across income groups: borrowers in the lowest income quintile held savings equivalent to just under one year of scheduled repayments, while those in the highest quintile held almost two years.