The Reserve Bank of Australia raised its benchmark cash rate by a quarter point to 4.85% on November 3, the fifth increase this year and the highest level since 2008. The bank cited persistent inflation and rising energy costs linked to the Iran war.
The decision followed September quarter data showing headline inflation at 4.3% and the annual trimmed mean at 3.7%, both above the bank's 2-to-3% target. A fifth hike adds about $91 a month to a $600,000 mortgage, and banks see a risk of another rise in February 2027.
Why it matters
A fifth hike adds about $91 a month to a $600,000 mortgage, and banks see another increase as possible in February.
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Key Indicators
4.85%
Official cash rate
The highest level since 2008, after the November 3 quarter-point increase.
5
Rate hikes in 2026
Five quarter-point increases totaling 125 basis points, more than reversing the 75 basis points of easing in 2025.
4.3%
Headline inflation, September
Annual headline inflation rose from 4.0 percent in August. Fuel prices climbed 9.4 percent in September after a 14.8 percent jump in August.
3.7%
Underlying inflation, Q3
The annual trimmed mean measure, the Reserve Bank's preferred gauge, remains above the 2-to-3 percent target.
$91
Monthly mortgage increase
Extra repayment on a typical $600,000 mortgage with 25 years remaining, per this single hike.
4.7%
Unemployment, September
Unexpectedly hit a five-year peak, easing the labour market more than the RBA had forecast.
14 events
Latest: November 3rd, 2026 · 1 week ago
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November 2026
RBA raises cash rate to 4.85%, highest since 2008
LatestMonetary Policy
The board lifted the cash rate by a quarter point, its fifth hike of 2026, citing persistent inflation and rising energy costs linked to the Iran war. It said more hikes may be needed.
October 2026
September quarter inflation stays hot as fuel prices surge
Economic Data
Headline consumer prices rose 4.3% in the year to September, up from 4.0% in August. The annual trimmed mean was 3.7%, and fuel prices rose 9.4% in September after a 14.8% jump in August.
Bullock says inflation likely higher than August forecast
Monetary Policy
Governor Michele Bullock told a Senate economics committee that some risks in the bank's August forecasts had materialised. She said inflation would likely be higher than the bank's base case.
Big four banks line up behind November rate hike
Business
Commonwealth Bank and ANZ forecast a quarter-point rise to 4.85% on November 3, and Westpac reaffirmed its call. All four major banks now expect the move; CBA called it an insurance hike.
Market odds of a November rate rise pass 60 percent
Markets
Ahead of third-quarter inflation data on October 28, traders priced a better-than-even chance of a fifth hike on November 3. Headline consumer prices are forecast to rise 1.3 percent for the quarter, leaving the annual pace near 3.9 percent.
RBA's Hunter says the inflation fight is 'not quite yet' won
Monetary Policy
Assistant Governor Sarah Hunter told 60 Minutes that four hikes this year had not yet brought inflation under control, and that higher rates do work but take time to flow through. She said falling house prices were not causing systemic financial stress.
Deputy governor says inflation outlook 'materially worse'
Monetary Policy
Andrew Hauser told a Citi conference the bank's economists were still finalising forecasts, but the outlook had worsened, partly on high oil prices, and policy had to stop those costs feeding into inflation expectations. Market pricing for a November hike rose from 30 percent to 45 percent. He noted unemployment had reached 4.7 percent and house prices had fallen faster than expected.
Banks pass the September hike to variable borrowers
Business
CBA, Westpac, NAB and ANZ raised variable home-loan rates by 0.25 percentage points from October 9, matching the RBA's increase. Canstar counted 289 fixed-rate products lifted by 17 lenders in the week after the decision. ANZ's lowest variable rate is now 6.50 percent.
Former RBA board member calls November hike 'plausible'
Monetary Policy
Speaking at a Centre for Independent Studies event, Ian Harper said another increase before year's end is 'plausible' but declined to call it 'likely'. Market pricing puts the chance of a November 3 hike at about one in three.
CBA chief says November rate rise is 'live' possibility
Business
Commonwealth Bank chief executive Matt Comyn said CBA believes the RBA has finished hiking for now, but the November 3 meeting is 'live' and another rise remains possible. The major banks are split: Westpac and ANZ expect a fifth hike, while CBA and NAB expect a hold.
RBA says most borrowers can cope with higher rates
Financial Stability
The RBA's half-yearly Financial Stability Review found less than 2 percent of variable-rate borrowers had a cash flow shortfall as of June. The median borrower has buffers covering more than a year of repayments.
September 2026
August inflation hits 4.0%, keeping November hike in play
Economic Data
Headline inflation rose to 4.0 percent in the year to August, up from 3.5 percent in July, on fuel and housing costs. Underlying inflation held at 3.6 percent for a third month. Westpac chief economist Luci Ellis said a fifth rate hike in November is now the most likely outcome.
Big four banks pass on full rate hike from October 9
Business
Commonwealth, NAB, Westpac and ANZ said they would lift variable home-loan rates by 0.25 percentage points from October 9, matching the RBA's increase in full.
RBA hikes cash rate to 4.60%, a 15-year high
Monetary Policy
The board voted unanimously to raise the cash rate by a quarter point, its fourth hike of 2026. The bank warned it may hike again as inflation stays above its 2-to-3 percent target.
Scenarios
1
RBA hikes again in November, cash rate hits 4.85%
Possible
Resolves by End of 2026
Discussed by: Market pricing (about 85% probability), all four major banks and CreditorWatch
The RBA raised the cash rate to 4.85% on November 3, adding about $91 a month to a $600,000 mortgage and taking it above the 2011 peak of 4.75%.
2
RBA holds at 4.60% as cooling data builds the case for a pause
Likely
Resolves by Nov 30, 2026
Discussed by: AMP chief economist Shane Oliver and a minority of market pricing (about 15%)
This did not happen. The RBA raised the cash rate to 4.85% on November 3 after September quarter inflation stayed above target.
3
RBA cuts rates in 2027 as recession risks deepen
Possible
Resolves by Q2 2027
Discussed by: AMP chief economist Shane Oliver (warning of recession risk); Business Times coverage
If the Middle East conflict drags the global economy down, or the accumulated rate increases push domestic demand too far, the RBA would pivot to easing. The 2008-2009 episode shows how quickly a tightening cycle can reverse. Oliver says rising recession risks make it plausible that no further hikes, let alone a third and fourth, will be needed.
4
RBA hikes again in February 2027
Possible
Resolves by Feb 28, 2027
Discussed by: Commonwealth Bank, ANZ and Westpac economists
The major banks expect a pause after November but flag a rising risk of another quarter-point rise in February. That would depend on fuel costs and inflation expectations staying elevated.
Historical Context
3 moments from history that rhyme with this story — and how they unfolded.
1 of 3
October 2011
Cash rate peak, October 2011
The cash rate stood at 4.75 percent in October 2011, the last time it sat above 4.5 percent before this week. Global uncertainty and a fading mining investment boom pushed the Reserve Bank to begin cutting the following month.
Then
The November 2011 cut opened an easing cycle that ran through 2012 as inflation stayed low.
Now
Australian interest rates stayed well below their 2011 levels for more than a decade.
Why this matters now
It is the exact level this week's 4.60 percent rate is measured against, and it shows how a tightening cycle tops out when growth cools.
2 of 3
1989 to 1991
Australia's 1990-91 recession
In the late 1980s the Reserve Bank pushed the cash rate into the high teens, peaking around 18 percent in early 1990, to cool a credit-driven boom. The economy tipped into recession and unemployment climbed above 10 percent.
Then
Consumer spending and business investment fell sharply, and the housing market cooled.
Now
It launched nearly three decades of recession-free growth and became the standard cautionary tale about tightening too hard.
Why this matters now
It is the overshoot risk in the current cycle: the bank is raising rates because it cannot tolerate years of above-target inflation, but pushing too far risks tipping the economy into a downturn.
3 of 3
2008 to 2009
GFC rate reversal, 2008-2009
In March 2008 the Reserve Bank pushed the cash rate to a 12-year high of 7.25 percent to fight inflation. As the global financial crisis spread, it slashed the rate back to 3.00 percent by April 2009, a cut of more than four percentage points in about a year.
Then
Mortgage rates fell sharply and the steep cuts cushioned the domestic economy through the crisis.
Now
The episode showed how quickly a central bank's tightening campaign can reverse when financial stress hits.
Why this matters now
It is the other precedent for today: the RBA is signaling more hikes, but history shows a rapid about-face is possible if growth or markets crack first.
