Key Highlights

  • The Monetary Policy Board raised the cash rate target by 25 basis points to 4.60 per cent on 29 September 2026, unanimously among the nine members participating.
  • The minutes say the August forecast of Inflation returning to the target midpoint around late 2027 now looks less likely.
  • The next Board meeting is scheduled for 2 and 3 November 2026, with September-quarter CPI data due shortly before it.

The Reserve Bank of Australia's latest Board minutes suggest the Central Bank is less confident about reaching its inflation goal on time. The minutes say the August forecast of inflation returning to the midpoint of the target around late 2027 now looks less likely, because several conditions behind that forecast are unlikely to hold.

What the minutes said and when

The Monetary Policy Board met on 28 and 29 September 2026 and raised the cash rate target by 25 basis points to 4.60 per cent. The decision, announced on 29 September, was unanimous among the nine members participating. The minutes were published on 13 October 2026, two weeks after the meeting.

According to the minutes, the upside risks flagged in August have materialised. The Middle East conflict broadened, oil prices rose well above forecast, global cost pressures linked to artificial intelligence built up, and domestic capacity appears more constrained than assumed. The Board also judged that excess Demand is greater than it previously thought.

The numbers behind the shift

The minutes give several data points. Domestic petrol and diesel prices were 13 per cent above the August forecasts. The Unemployment rate was 4.6 per cent in August. Private Business Investment was up more than 10 per cent over the year. Scheduled Mortgage payments account for about 10 per cent of household disposable income, around the 2024 peak.

These figures matter because they show an economy under cost pressure but not collapsing. That is the uncomfortable mix the Board is trying to manage.

Why the Board chose to hike

The minutes record three arguments for raising rates, all accepted by the Board. Several August risks had materialised or were building. A timely response would better balance the inflation and employment objectives, since waiting could be costly if business inflation expectations were rising. And the current rate might not be restrictive enough to return the economy to balance within a reasonable time.

The case for holding was considered briefly and not accepted. The minutes say scenario analysis suggested even large falls in housing prices would have only modest direct effects on spending.

What it means for households and businesses

The cash rate is the RBA's policy rate. It is not the rate you pay on a mortgage or earn on a savings account, and individual lenders decide how and when they change customer rates. The minutes do not tell borrowers or savers what their own lender will do.

What they do show is the direction of the Board's thinking. The Board said it will continue to do what it considers necessary, including increasing the cash rate target further if required. That is a statement of readiness, not a promise of another rise.

Uncertainties

The minutes stress that the outlook depends on Middle East developments, external demand, domestic capacity pressures, cost pass-through and inflation expectations. The Board also noted that the degree to which financial conditions are restrictive is uncertain, partly because neutral interest rates may have risen.

What to watch next

The next Monetary Policy Board meeting is scheduled for 2 and 3 November 2026. September-quarter consumer price data from the Australian Bureau of Statistics is due shortly before it, and RBA officials have said they do not target single data points. Updated RBA forecasts will show whether the late-2027 expectation has formally moved. Neither event changes the Board's stated approach of responding to incoming data and the evolving outlook.