Effective Today: Australia Wakes Up to a 4.85% Cash Rate

Sonal Goyal

04 November 2026 05:13 PM AEDT

Effective Today: Australia Wakes Up to a 4.85% Cash Rate

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Key Highlights

The cash rate target rose 25 basis points to 4.85 per cent, effective 4 November 2026.
The decision was six votes to three, with the minority reasons not published.
Underlying Inflation is 3.7 per cent in year-ended terms, well above the 2–3 per cent target.
Lenders decide how and when any change flows through to individual Loan and deposit rates.

The decision was announced at 2.30 pm AEDT on Tuesday, 3 November, when the Monetary Policy Board raised the cash rate target by 25 basis points, from 4.60 per cent. The RBA's cash rate page lists the new target as effective from today, 4 November 2026.

It was not a unanimous call. Six members of the Board voted to increase the rate, while three voted to leave it unchanged at 4.60 per cent. The Board's statement does not set out the reasons for the minority view.

The move caps a year in which the cash rate has climbed in five steps of 25 basis points each, a total of 125 basis points since the start of 2026. The rate now sits at its highest point of that cycle, and above the 4.35 per cent that applied before the RBA began cutting in February 2025.

What changed overnight, and what did not

The cash rate target is the RBA's main policy lever. It anchors the Interest Rate on overnight loans between banks and flows through, over time, to the broader structure of interest rates in the economy. What it does not do is set the rates on individual home loans, Business loans or savings accounts. Lenders set their own rates, and how and when they pass on any change is a matter for each of them.

While the policy setting itself is now in force, the effect on any particular household or business depends on their lender, their loan type and their circumstances.

What the decision does signal is the Board's assessment of the economy. In its statement, the Board said: "Inflation remains elevated and recent data indicate that it is broadly based." It added: "Since the previous meeting, the data have confirmed that underlying inflation remains broadly based."

The inflation numbers behind the decision

Two different measures of inflation sit behind the Board's concern, and it matters which one is being discussed.

Headline CPI, monthly: 4.3 per cent over the year to September 2026.
Headline CPI, quarterly: 3.9 per cent over the year to the September quarter, unchanged from the June quarter.
Trimmed mean (underlying) inflation: 1.0 per cent in the September quarter alone, up from 0.8 per cent in the June quarter, and 3.7 per cent in year-ended terms.

Headline CPI captures the full basket of prices, including volatile items such as fuel. The trimmed mean strips out the largest price movements in either direction to give a steadier read on underlying pressures. Both are above the RBA's 2–3 per cent target range.

The Board's statement also looked ahead: "Inflation is now expected to remain above 3 per cent for the coming year." Higher energy prices linked to the Middle East conflict have added to pressures, according to the November Statement on Monetary Policy (SMP), released alongside the decision.

The SMP contains RBA forecasts showing headline CPI inflation peaking at 4.5 per cent in the December quarter of 2026, with trimmed mean inflation forecast at 3.6 per cent at the same point. Both measures are forecast by the RBA to stay above 3 per cent until the end of 2027. The statement says inflation is expected to return to the top of the target range in late 2027, about three quarters later than previously forecast.

A slowing economy on the other side of the ledger

The Board's statement did not present a picture of an economy running hot. "The economy is slowing," it said bluntly. Household consumption has been a key drag on GDP growth, and the statement noted that "housing prices have fallen significantly". The SMP puts the fall at about 5 per cent from the March peak.

The labour market has softened too. The Unemployment rate was 4.7 per cent in September 2026. The statement noted: "Employment is expected to continue to grow, but the unemployment rate is projected to rise by more than expected in the August forecasts."

Why raise rates into a slowing economy? The majority's reasoning, as set out in the statement, centred on the risk to inflation expectations: "there is an increasing risk that higher inflation expectations will become embedded." The statement said that "a further tightening in financial conditions is warranted to support the return of inflation to target."

The Board also acknowledged the effect of earlier moves: "The increases in the cash rate target since the beginning of the year have tightened financial conditions."

What comes next on the calendar

Today's effective date is the start of a busy stretch for the central bank. The RBA's homepage lists the following:

Chart Pack: 4 November, 11.30 am AEDT.
Deputy Governor Andrew Hauser delivers the Sir Leslie Melville Lecture at the ANU in Canberra on 5 November, 5.45 pm AEDT.
Assistant Governor (Economic) Sarah Hunter speaks at the UBS Australasia Conference in Sydney on 9 November, 9.30 am AEDT.
Next CPI release: 25 November.
Next Board decision: 8 December, 2.30 pm.

The content of the upcoming speeches has not been published, and this article does not speculate on it. Governor Michele Bullock held a media conference at 3.30 pm AEDT on 3 November, but a transcript was not available .

On future policy, the Board made no promises. Its statement said "the Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions." It also said: "Monetary policy is well placed to respond to developments".

The RBA's forecasts are built on an assumed cash rate path drawn from market pricing as at 28 October 2026, not on a commitment by the Board. That pricing implied the cash rate rising about 35 basis points by mid-2027 before the rate stabilises at 4.8 per cent in 2028. Markets can and do change their minds, and the Board's decisions will rest on the data.

The bottom line

From today, the cash rate target is 4.85 per cent, following a six-to-three vote to lift it by a quarter of a percentage point. The Board's central concern is that inflation, on both headline and underlying measures, remains broadly based and well above target, with a risk that higher expectations become entrenched. Against that, the economy is slowing, housing prices have fallen and unemployment is projected to rise. How the decision flows through to individual loans and deposits is up to each lender. The next data point to watch is the 25 November CPI release, ahead of the Board's 8 December meeting.

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