Key Highlights

  • The November rate rise was carried by six votes to three on 3 November 2026.
  • Three members preferred to leave the cash rate unchanged at 4.60 per cent.
  • The Board's statement explains the case for tightening but not the minority view.
  • The majority's reasoning centred on the risk that Inflation expectations become embedded.

Six in favour, three against. That was the arithmetic behind the Reserve Bank of Australia's decision on 3 November 2026 to lift the cash rate target by 25 basis points to 4.85 per cent.

The Statement by the Monetary Policy Board records that the decision was made by majority. Six members voted to increase the cash rate target. Three voted to leave it unchanged at 4.60 per cent. The new setting took effect on 4 November.

A split of that size is worth unpacking. It tells readers that the Board did not see the outlook through a single lens, and that the decision to raise rates for a fifth time this year was a judgement call rather than a foregone view. What the statement does not tell readers is why the minority held its view. On that question, the record is blank.

What the majority argued

The statement sets out the reasoning of the six members who voted for the rise in two key sentences: "there is an increasing risk that higher inflation expectations will become embedded." And: "a further tightening in financial conditions is warranted to support the return of inflation to target."

The concern is less about where inflation is today than about where people and businesses expect it to go. If households, workers and firms come to assume that inflation will stay high, they may set prices and wages accordingly, making it harder to bring inflation down.

The data the majority had in front of them supported a cautious reading. The statement said: "Inflation remains elevated and recent data indicate that it is broadly based." It went further: "Since the previous meeting, the data have confirmed that underlying inflation remains broadly based."

On the numbers:

  • Headline CPI rose 4.3 per cent over the year to September 2026 on the monthly measure.
  • Headline CPI rose 3.9 per cent over the year to the September quarter, unchanged from the June quarter.
  • Trimmed mean (underlying) inflation rose 1.0 per cent in the September quarter, up from 0.8 per cent in the June quarter, for 3.7 per cent in year-ended terms.

The RBA's own November forecasts reinforce the point. Headline CPI is forecast to peak at 4.5 per cent in the December quarter of 2026, compared with 3.6 per cent in the August forecast. Trimmed mean inflation is forecast at 3.5 per cent in June 2027, up from 3.0 per cent in August. The Statement on Monetary Policy (SMP) notes that wage growth forecasts were also revised higher, in part because of inflation expectations, and that the RBA's liaison contacts report elevated wage expectations.

The other side of the ledger

The statement does not explain the minority's view, and it would be wrong to put words in the mouths of the three members who voted to hold. What can be done is to set out the parts of the RBA's own published assessment that point in a different direction from the inflation data. Readers can weigh these for themselves, with the clear caveat that there is no record linking any of them to the minority vote.

The statement itself says: "The economy is slowing." It notes that "housing prices have fallen significantly" and that "falls in housing prices and turnover are expected to weigh on growth in dwelling investment".

It also observes that earlier rises are already working through: "The increases in the cash rate target since the beginning of the year have tightened financial conditions." The SMP adds that the Board judges financial conditions to be restrictive, though the extent is uncertain, and that government bond yields are at multi-year highs.

The labour market is softening too. Unemployment was 4.7 per cent in September 2026, and the statement says the rate "is projected to rise by more than expected in the August forecasts." The RBA forecasts unemployment reaching 5.1 per cent by the end of 2028.

Finally, the SMP identifies a downside scenario in which households and businesses respond more strongly to higher oil prices, interest rates and falling house prices. In that scenario, GDP would be about 1.0 per cent lower by end-2028 and unemployment 0.3 percentage points higher, with inflation only modestly lower.

These considerations are part of the RBA's published picture. Whether they shaped the minority vote is not something the statement discloses.

A shared language of uncertainty

Despite the split, the statement reads as a single Board document, and some of its language applies to all nine members. "There continue to be heightened uncertainties about the outlook for domestic economic activity and inflation," it says. It notes that "The Middle East conflict remains unresolved" and that "there are scenarios where inflation is higher and activity lower than forecast."

both camps were weighing the same uncertain world.

The SMP adds that domestic inflation risks remain skewed to the upside, while domestic activity risks are broadly balanced. It also notes that inflation could fall faster if higher rates and falling housing prices weigh on spending.

The statement's commitments are also shared: "The Board will continue to do what it considers necessary to bring inflation sustainably back to target." And: "the Board is focused on its mandate to deliver price stability and full employment."

What a split does and does not mean

A six-to-three majority settles the decision. The cash rate target is 4.85 per cent regardless of the margin. But it does tell observers that the case for further moves is contested within the Board.

It does not tell anyone what the Board will do next. The statement says "the Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions." The RBA's forecasts rest on market pricing as at 28 October 2026, which implied the cash rate rising about 35 basis points by mid-2027. That is the market's view, not an RBA promise.

Governor Michele Bullock held a media conference on 3 November, but a transcript was not available so it is not drawn on here.

The bottom line

The November rise was carried by six votes to three. The majority's case, set out in the Board's statement, rests on broadly based inflation and the risk that higher inflation expectations become embedded. The statement offers no reasons for the three members who preferred to hold at 4.60 per cent. The RBA's published assessment does highlight a slowing economy, falling housing prices, rising unemployment and already tight financial conditions, but nothing in the record ties those factors to the minority. The next decision is due on 8 December.