With the cash rate target now at 4.85% after a split 6–3 decision, the Reserve Bank's 8 December meeting arrives with several open questions about inflation, jobs, housing and how far the Board is prepared to go.

Five increases in one calendar year is a lot of tightening. February, March, May, September and now November have added a cumulative 125 basis points to the cash rate in 2026. The latest 25 basis point move, announced at 2.30 pm AEDT on 3 November 2026 and effective from 4 November, took the cash rate target from 4.60% to 4.85%.

The Monetary Policy Board meets once more this year, with its decision due at 2.30 pm on 8 December 2026. What follows are the questions that decision will have to grapple with, drawn from what the RBA has published, not from guesses about the outcome.

Question one: how much did the split vote change?

The 3 November decision was not unanimous. Six members voted to raise the cash rate target to 4.85%, while three voted to hold at 4.60%. That contrasts with September, when the Board voted unanimously to lift the rate from 4.35% to 4.60%.

A 6–3 vote shows the Board is divided on the balance of risks, though it does not reveal how any individual member is leaning for December. What it does suggest is that the case for further tightening is contested inside the room. Members will weigh fresh data against the same tension that produced the split: Inflation that remains elevated, against an economy that the Board's own statement says "is slowing".

Question two: what will inflation, and expectations, show?

The next monthly CPI update is due on 25 November 2026, about two weeks before the meeting. Recent headline readings have moved higher:

  • July 2026: 3.5%
  • August 2026: 4.0%
  • September 2026: 4.3%.

Headline CPI is distinct from underlying inflation. The trimmed mean, an underlying measure, was 3.7% over the year to the September quarter and 1.0% in the quarter itself. The Board's statement said "Inflation remains elevated and recent data indicate that it is broadly based."

The November Statement on Monetary Policy forecasts headline CPI inflation of 4.5% over the year to December 2026, up from 3.6% in the August forecasts, and trimmed mean inflation of 3.6%, up from 3.3%. These are forecasts, not outcomes, and will be tested by the data. The Board's statement said inflation is now forecast "to remain elevated through much of 2027", and is not expected to reach the top of the 2–3% target range until late 2027, about three quarters later than previously forecast.

Then there are expectations. The most pointed line in the statement concerned inflation expectations: "there is an increasing risk that higher inflation expectations will become embedded." The RBA noted that some measures have risen lately.

Deputy Governor Andrew Hauser made a similar point before the decision. Speaking at a Citi conference in Sydney on 21 October 2026, he said a rising share of firms see 3–3.5% inflation as the "new normal" and warned: "We can't allow expectations to shift away from the target."

Research published by the RBA adds context. A Research Discussion Paper by Jonathan Hambur and Qazi Haque, released on 22 October 2026, found that professional forecasters' perceived responsiveness of policy to inflation rose sharply after the 2022 tightening, and that beliefs shifted after actual policy moves, with communication alone not enough. That finding does not dictate any decision, but it is relevant to how the Board thinks about credibility.

Question three: how much weaker can jobs and housing get?

The other side of the ledger is the economy. The Board's statement said: "The economy is slowing, housing prices have fallen significantly and the Unemployment rate has risen." It added that "the unemployment rate is projected to rise by more than expected in the August forecasts".

The November SMP forecasts unemployment at 4.7% in December 2026, rising to 4.9% by December 2027 and 5.1% by December 2028. GDP growth is forecast at 1.6% over the year to December 2026 and 1.3% to December 2027. Again, these are forecasts.

RBA officials have been open about the trade-off. Hauser said: "We need a period of below-trend growth to bring inflation down, and we're seeing that happening." He also said: "No lost Job is one to celebrate." Assistant Governor (Economic) Sarah Hunter, in an interview aired on 25 October 2026, said of recession: "We don't see any signs of that yet in any of the data that we track."

Households are in focus too. The September minutes recorded scheduled Mortgage payments at about 10% of household disposable income, around their 2024 peak, with owner-occupier borrowers in Cash Flow shortfall under 2%. Those figures predate the November increase.

Question four: what are markets assuming?

The SMP's forecasts rest on a cash rate assumption derived from market pricing as at 28 October: a year-average of 4.7% for 2026 and 4.9% for 2026/27. That assumption is not an RBA commitment and markets can move quickly. Assistant Governor (Financial Markets) Christopher Kent, speaking on 19 October 2026, noted that the cash rate and expected path then sat at the upper end of the range of neutral estimates, while cautioning on the neutral rate itself: "Well, I would dispute that we know where it is now."

The Board has given no commitment either way. Its statement said: "The Board will continue to do what it considers necessary to bring inflation sustainably back to target." Hunter, before the decision, put the RBA's stance on signalling simply: "I'm not going to front run what the Board might or might not do with interest rates."

The bottom line

The 8 December meeting will be the Board's last chance in 2026 to respond to the data. The key inputs are already clear: the 25 November monthly CPI, signs of whether inflation expectations are becoming embedded, and evidence on how quickly unemployment is rising and housing is weakening. The 6–3 vote shows those judgements are finely balanced. The RBA has not signalled what it will do, and anyone affected by rate changes can consider speaking with their lender or a licensed adviser about their own circumstances.