On November 3, 2026, the Reserve Bank of Australia (RBA) increased its benchmark cash rate by 25 basis points to 4.85%, marking the highest level since November 2008. This decision aligns with economists' expectations and represents the fifth rate hike this year as the country faces persistent inflation, with the consumer price index rising to 4.3% in September from 4% in August.
RBA governor Michelle Bullock highlighted that inflation remains 'too high,' driven by factors such as rising oil prices due to the Iran War and robust domestic spending. She indicated that further rate increases could occur if necessary to manage inflation.
Additionally, Australia's GDP growth has slowed, with a 2.1% increase in the June quarter compared to a year earlier, down from 2.5% in the March quarter. While the RBA is focused on controlling inflation, Bullock stated that a recession is not currently considered the base case for Australia.
This rate hike is significant as it reflects the central bank's commitment to addressing inflation while balancing the economic impacts on households and overall activity