Australia Raises Interest Rate to 4.85% in Fifth Hike of 2026 as Inflation Stays High

Australia’s central bank raised its cash rate by 25 basis points to 4.85 percent on Tuesday, 3 November 2026, its fifth increase of the year and the highest level since late 2008, as policymakers warned that inflation remains stubbornly high.

FAKTA

• The Reserve Bank of Australia raised the cash rate by 0.25 percentage points, from 4.60 percent to 4.85 percent, effective 4 November 2026.
• The decision was split: six board members voted for the rise and three preferred to hold at 4.60 percent.
• It is the fifth rate rise of 2026, following increases in February, March, May and September, and a total of 1.25 percentage points of tightening this year.
• Underlying inflation accelerated to a two-year high of 3.7 percent in the third quarter, above the bank’s 2–3 percent target range.
• The bank no longer expects inflation to return to the top of its target range until late 2027, about nine months later than it forecast in August.

Australia rate rise to 4.85 percent

The Reserve Bank said it would continue to do what it considers necessary to bring inflation sustainably back to target, but it removed a reference to increasing the cash rate further if needed. Markets took the split vote as a sign the bank could hold at its December meeting, and the Australian dollar slipped 0.3 percent to about $0.6979 after the announcement.

Reuters reported that 30 of 32 economists surveyed had expected the rise. The bank’s tightening this year has more than reversed 75 basis points of easing in 2025, putting Australia at the hawkish end of developed-market central banks, while the US Federal Reserve stayed on hold this month.

What the rise means for households

If lenders pass on the full 0.25 percentage-point increase, repayments on a $750,000, 30-year owner-occupier loan could rise by about $125 a month, or about $1,496 a year, according to Australian mortgage reporting. A $600,000 variable loan could cost about $99 a month more.

Macquarie Bank became the first lender to pass on the full increase, lifting variable home loan rates by 0.25 percentage points from 19 November, according to ABC reporting cited in market coverage. Other lenders set their own dates for passing on the change, and borrowing capacity may fall for some applicants.

Frequently Asked Questions

Why did Australia raise interest rates?

Because inflation remains above the Reserve Bank’s 2–3 percent target, with underlying inflation at a two-year high of 3.7 percent in the third quarter.

How much is the cash rate now?

4.85 percent, effective 4 November 2026, its highest level since late 2008.

Will mortgage repayments rise?

Only if lenders pass on the increase; a full pass-through would add about $125 a month to a $750,000, 30-year loan.

When does the bank meet next?

On 7–8 December 2026, with future decisions guided by incoming data.

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