The Reserve Bank of Australia raised its cash-rate target by 25 basis points to 4.85% on 3 November 2026, its fifth increase of the year and the highest rate in 18 years. The decision was 6–3.

The guidance changed more than the rate

The Board removed the prior statement that it was prepared to raise rates further if necessary. Governor Michele Bullock said the next move was uncertain, while the Bank retained an upside-inflation focus. That combination leaves policy restrictive without promising another increase.

The RBA projects headline inflation near 4.5% in the December quarter, underlying inflation around 3.7%, and a slow return toward the 2–3% target band. The unemployment rate is expected eventually to rise above 5%.

Market reaction and implications

The Australian dollar fell roughly 0.3% toward US$0.6977 after the decision as markets increased the probability of a hold at the next meeting. This reaction is consistent with a less explicitly hawkish statement, but it does not prove the tightening cycle is finished.

A pause would reduce immediate upward pressure on Australian front-end yields and the currency, while rate-sensitive equities may remain constrained by the already-high cash rate. The next signals are inflation, employment, household spending and whether the Board’s split narrows or widens.

Sources: Reserve Bank of Australia monetary-policy decision and forecast materials, 3 Nov 2026; Reuters market reporting, 3 Nov 2026.

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