Key Highlights

  • The RBA raised the cash rate target by 25 basis points to 4.85% on 3 November 2026.
  • The decision passed six votes to three, with three members preferring to hold at 4.60%.
  • Headline Inflation was 3.9% in the September quarter, and trimmed mean inflation was 3.7%.
  • The October CPI indicator on 25 November and the 8 December decision are the next key dates.

Nine days after the Reserve Bank lifted the cash rate target to 4.85 per cent, households are weighing a higher borrowing benchmark against a mixed picture of inflation, jobs and housing.

On 3 November 2026 the Reserve Bank of Australia's Monetary Policy Board announced that it had raised the cash rate target by 25 basis points, taking it from 4.60 per cent to 4.85 per cent. The RBA website lists the new target with an effective date of 4 November 2026.

The Board's statement was direct: "At its meeting today, the Board decided to increase the cash rate target by 25 basis points to 4.85 per cent." It added that "the Board judged that a further tightening in financial conditions is warranted". The decision was not unanimous. Six members voted to increase the rate, while three voted to leave it unchanged at 4.60 per cent.

Why the Board moved

The central reason given was inflation. The Board's statement said "Inflation is now forecast to remain elevated through much of 2027" and that it "will continue to do what it considers necessary to bring inflation sustainably back to target."

It helps to be precise about which inflation figures are in play, because several are quoted at once:

  • Monthly headline CPI indicator: 4.3 per cent annual change in the September month of 2026.
  • Quarterly headline CPI: 3.9 per cent over the year to the September quarter.
  • Trimmed mean (underlying) inflation: 3.7 per cent over the year to the September quarter.

These are different measures and are not interchangeable; the trimmed mean is the RBA's gauge of underlying inflation.

At her media conference, Governor Michele Bullock was careful to separate the decision from the oil shock that has pushed up fuel costs. She said "we are not tightening monetary policy because of the direct impact of oil prices on inflation." She added: "Monetary policy cannot impact global oil prices." Her concern lay elsewhere: "It is critical that we stop expectations for high inflation from becoming embedded in price-setting decisions".

The household Balance Sheet in October

The RBA's Financial Stability Review, published on 1 October 2026, offers the most detailed official snapshot of household finances available before the November rise. It found that the share of variable-rate owner-occupier borrowers with a cash-flow shortfall "increased a little over the first half of 2026, but remains relatively low at around 2 per cent."

Buffers were another feature. According to the Review, the median borrower can cover "over a year of scheduled Mortgage payments at current interest rates" from their savings buffers. The Review also estimated that "less than 1 per cent of borrowers" were in negative equity.

The Review's overall message was measured: "Most borrowers appear well placed to manage ongoing cost pressures amid declining housing prices." It also stated that "the Australian financial system remains resilient, but there's no room for complacency."

The next Financial Stability Review is scheduled for 25 March 2027.

To give a sense of scale, the following is an illustration only, using hypothetical rates rather than quoted lender rates. On a 30-year principal and interest Loan of $550,000, a hypothetical rate rising from 6.10 per cent to 6.35 per cent would lift repayments from about $3,333 to about $3,422 a month — roughly $89 more. Actual pass-through by lenders varies.

Jobs, housing and growth

Beyond mortgages, households are also exposed to the labour market. The RBA's November Statement on Monetary Policy noted that "The Unemployment rate rose by more than expected to average 4.6 per cent in the September quarter." The Bank attributed much of the rise to higher-than-expected labour supply, while observing that "employment growth held up in the September quarter as expected".

Looking further out, the Statement forecasts that "The unemployment rate is forecast to rise to a bit over 5 per cent by end-2028." Its quarterly path has unemployment at 4.7 per cent in December 2026, edging up to 5.1 per cent by December 2028.

Housing is another moving part. The Statement said "housing prices have declined by more than expected" and that they "have declined further from their peak in March". For many households, home values are their largest asset, so falling prices can shape spending and confidence even for those without a mortgage.

The broader economy is also cooling. GDP growth "has slowed this year to a little below its potential growth rate", according to the Statement, with year-ended growth forecast at 1.6 per cent in December 2026 and 1.3 per cent by December 2027.

What comes next on the calendar

Several scheduled events in the coming weeks will add information for households following the rate outlook:

  • 17 November, 11.30 am AEDT: Minutes of the November 2026 Monetary Policy Board meeting. Earlier that day, at 10.00 am AEDT, Governor Bullock is scheduled to appear on a panel at the ASIC Annual Forum in Sydney.
  • 25 November: The monthly CPI indicator for October.
  • 8 December, 2.30 pm: The next cash rate decision.

The Statement on Monetary Policy also expects that "Headline inflation is expected to peak at 4.5 per cent in the December 2026 quarter", with headline and trimmed mean inflation "expected to remain above 3 per cent until end-2027". Those forecasts were finalised on 28 October 2026 and are conditioned on a cash rate path derived from market pricing, not a commitment by the Board.

The bottom line

Nine days on, a 4.85 per cent cash rate leaves households facing higher borrowing costs at the same time as unemployment is drifting up and housing prices are falling. The RBA's own October review suggested most borrowers entered this period with buffers and that financial stress remained limited, though that snapshot came before the latest rise. Governor Bullock framed the choice plainly: "Some pain now will prevent even worse pain down the track." How that trade-off plays out will depend on the inflation and jobs data still to come, starting with the October CPI indicator on 25 November.