The Reserve Bank's own forecasts rest on market pricing that, as of late October, pointed to a cash rate averaging 4.9% over 2026/27, a hint that investors were not yet ready to call the top.

Every Statement on Monetary Policy carries an assumption that rarely makes headlines but says a great deal: the path of the cash rate that underpins the RBA's forecasts. The Reserve Bank does not invent this path. It takes it from market pricing. In the November 2026 Statement, released at 2.30 pm AEDT on 3 November alongside the Board's latest rate decision, that assumption carried a clear message about where investors thought rates were heading.

On the same afternoon, the Monetary Policy Board lifted the cash rate target by 25 basis points to 4.85%, effective 4 November. The vote was 6–3: six members supported the increase and three wanted to hold at 4.60%. It was the fifth rise of 2026, taking the year's cumulative increase to 125 basis points.

So is this the peak? The honest answer is that nobody knows, and the RBA says as much. But the market-based assumptions offer one window into expectations.

What the assumption shows

The November Statement's cash rate assumption is expressed as year averages, based on market pricing as at 28 October:

  • 2026: 4.7%
  • 2026/27: 4.9%
  • 2027: 4.8%
  • 2027/28: 4.8%
  • 2028: 4.8%

These are not RBA forecasts of its own decisions and they are not a promise. They are a snapshot of what financial markets were pricing on one day, used to make the forecasts internally consistent.

The 2026/27 figure stands out. That financial year runs from July 2026 to June 2027, and its early months included periods when the cash rate was 4.35% and then 4.60%. For the year as a whole to average 4.9%, market pricing as at 28 October implied the cash rate sitting above today's 4.85% for part of that period. In plain terms, as of late October, markets were not pricing November as the last move.

Beyond 2026/27, the averages settle at 4.8%, slightly below today's 4.85%. That pattern suggests markets at the time expected rates to peak and then ease modestly, though not quickly.

How expectations have shifted

Market pricing has moved over recent months. At the September meeting, according to the minutes, markets were pricing about 15 basis points more by year-end and 30 basis points in the first half of 2027. Since then, November's increase has delivered 25 basis points, more than the year-end amount implied in September.

Assistant Governor Christopher Kent, speaking at the CBA Global Markets Conference on 19 October, said the cash rate and its expected path then sat at the upper end of the range of estimates of the neutral rate. The neutral rate is the level at which policy is neither stimulating nor restraining the economy. But Kent was cautious about precision. On where the neutral rate sits, he said: "Well, I would dispute that we know where it is now."

The November Statement describes the current setting plainly: "Financial conditions are judged to be restrictive."

What would push rates higher, or hold them

The Board has not said whether more increases are coming. Its statement closed with a familiar line: "The Board will continue to do what it considers necessary to bring Inflation sustainably back to target."

Several factors will shape what happens next:

  • Inflation data. Monthly headline CPI rose 4.3% over the year to September 2026. Trimmed-mean inflation, the RBA's preferred underlying measure, was 3.7% over the year to the September quarter. The next monthly CPI update is due on 25 November.
  • Expectations. The Board said "there is an increasing risk that higher inflation expectations will become embedded."
  • Activity and jobs. The statement noted "The economy is slowing, housing prices have fallen significantly and the Unemployment rate has risen."
  • Energy. The SMP assumes energy prices decline from elevated levels, but notes they could stay high or rise if shipping and refining disruptions persist.

The SMP forecasts headline inflation of 4.5% by December 2026 and trimmed mean of 3.6%, with both remaining above 3% through much of 2027. Those forecasts were built on the market-implied rate path above. If the path changes, so would the forecasts.

Why the RBA leans on actions, not words

Recent RBA research helps explain why market expectations respond to what the Board does. A Research Discussion Paper published on 22 October by Jonathan Hambur and Qazi Haque, "Perceived Monetary Policy Rules: Evidence From Professional Forecasters in Australia", found that forecasters' perceived responsiveness of policy to inflation rose sharply after the 2022 tightening. Their beliefs shifted after actual policy moves; communication alone was not enough.

That finding sits alongside the Board's insistence on keeping expectations anchored. Deputy Governor Andrew Hauser said on 21 October: "We can't allow expectations to shift away from the target."

RBA officials have otherwise been careful not to pre-empt decisions. Assistant Governor Sarah Hunter said in an interview aired on 25 October: "I'm not going to front run what the Board might or might not do with interest rates."

The bottom line

Market pricing as at 28 October, used in the RBA's November forecasts, implied an average cash rate of 4.9% for 2026/27, which means investors were then expecting rates to sit above today's 4.85% for part of that year. Later averages of 4.8% suggest a modest easing afterwards. These are market assumptions, not RBA commitments, and the 6–3 vote shows the Board itself is not of one mind. The next decision is due on 8 December 2026. Readers weighing what rate expectations mean for their finances can consider speaking with a licensed adviser or their lender.