Reserve Bank of Australia lifts cash rate to 4.85%, an 18-year high

The decision. The RBA Monetary Policy Board raised the cash rate target by 25 basis points to 4.85%. It was a majority vote: six members for a hike, three for holding at 4.60%. Per Reuters, the bank has now hiked 1.25 points this year, more than undoing all of its 2025 cuts.

Why. The bank says inflation remains elevated and broadly based, meaning prices are rising across many goods and services, not just one. Part of it is higher fuel and commodity prices tied to the Middle East conflict. Another driver: AI-related investment is pushing up prices of technology goods quickly. Firms in the bank's liaison say they are raising prices or plan to.

New forecast. Inflation is expected to stay high through much of 2027 and above 3% over the coming year. It reaches the top of the 2-3% band only in late 2027. The bank warns that higher inflation expectations could become embedded and says some measures have risen lately.

The cost. The bank admits the economy is slowing, housing prices have fallen significantly and unemployment has risen. Per Reuters, unemployment hit a five-year high of 4.7% and underlying inflation sped up to 3.7% in the third quarter. The bank expects slower growth in home building and household spending, while business investment, including data centres, stays strong for now.

Market reaction. Per Reuters, the Australian dollar slipped 0.3% to $0.6979 after the decision. Markets are betting on a December pause. Analysts at BlackRock and Capital Economics quoted by Reuters also think the hiking cycle is probably over.

For the latest macro data and central bank rates, see https://freekonomist.com/en/macro/ . This is an overview, not advice.

Fatos confirmados

• On November 3, 2026 the RBA raised its cash rate target by 25 basis points to 4.85%.^[1]
• The decision was by majority: six members voted to hike, three to hold at 4.60%.^[1]
• The bank now expects inflation to reach the top of its 2-3% target only in late 2027, about three quarters later than previously forecast.^[1]
• The bank cites higher fuel and commodity prices linked to the Middle East conflict, tighter capacity pressures and AI-driven price growth in technology goods.^[1]
• The bank says the economy is slowing, housing prices have fallen significantly and unemployment has risen.^[1]
• Per Reuters, it is an 18-year high and the fifth hike of 2026, 125 basis points in total this year.^[2]
• Per Reuters, the statement removed a reference to raising rates further if needed; markets expect a December pause.^[2]
• Per Reuters, the Australian dollar slipped 0.3% to $0.6979.^[2]
• Per Reuters, underlying inflation was 3.7% in Q3 and unemployment hit 4.7%, a five-year high.^[2]

Implicações

• ConfirmadoLoans and mortgages in Australia get another 0.25 points more expensive.
• Nossa leituraThe split vote and softer wording make a December pause more likely. This is our view, in line with markets.
• Nossa leituraHigh rates may support the Australian dollar against currencies with lower rates. This is our view.

Ainda não se sabe

• Whether the RBA pauses in December
• How fast high oil prices fade from inflation if the Middle East conflict eases
• How much further house prices fall

Quem é afetado

Australia, Asia, World. People who hold AUD, trade currencies or follow central bank rates

Fontes

1. Reserve Bank of Australia: Statement by the Monetary Policy Board: Monetary Policy Decision 3 de novembro de 2026 · oficial
2. Reuters (via Investing.com): Australia's central bank lifts rates to 18-year high, split vote points to pause ahead 3 de novembro de 2026 · mídia