In brief
The RBA’s Monetary Policy Board increased the cash rate target by 25 basis points to 4.85%, marking its highest level since 2008. The decision, made by a 6‑3 vote, follows sustained inflation rises linked to fuel and commodity price hikes amid the Middle‑East conflict. Treasury Chief Jim Chalmers warned the spike already strains Australian consumers.
The Reserve Bank of Australia on Tuesday lifted its cash rate target to 4.85%, an 18‑year high, after a 6‑3 vote in its Monetary Policy Board. The rate hike follows four earlier 0.25‑point increases this year, taking the key rate to the highest level since 2008.
The board cited persistent inflation pressures, partly driven by higher fuel and commodity prices linked to the conflict in the Middle East. Official figures released on Oct. 28 showed the annual inflation rate rising from 4.0% in August to 4.3% in September, while the trimmed‑mean underlying inflation climbed from 3.5% to 3.6%.
The RBA aims for an annual inflation target of 2‑3%, and the board said inflation is now forecast to remain elevated through much of 2027, only expected to return to the top of the target range late that year.
"The Middle East conflict remains unresolved, and there are scenarios where inflation is higher and activity lower than forecast," the board’s decision statement read. "Global oil supply disruptions are maintaining upward pressure on energy prices and inflation, and prolonged uncertainty may also dampen growth overseas and in Australia."
In response, Treasury Secretary Jim Chalmers warned that the conflict is pushing sustained upward pressure on inflation and weighing on growth. He said the rate rise would be difficult news for Australians already paying a "hefty price" for circumstances beyond their control.
The RBA will hold its final meeting of 2026 in early December to review the rate, as all four major Australian banks had predicted the hike after the October inflation data. RBA Monetary Policy Board
