RBA lifts cash rate to 4.85 per cent, highest since 2008, in split decision
The fifth rise of 2026 divided the board six votes to three, and the bank expects inflation to stay above 3 per cent until late 2027.
Australian mortgage holders face higher repayments after the Reserve Bank raised the cash rate by 0.25 percentage points to 4.85 per cent on Tuesday, the highest level since late 2008. The Guardian, ABC News, SBS News and The Australia Today all reported it was the fifth increase this year.
The board was divided: six members voted for the rise and three for a hold at 4.60 per cent. Governor Michele Bullock said those favouring a hold pointed to the housing market's reaction, a rising jobless rate and no sign of faster wages growth, SBS News reported.
Canstar estimates the latest rise adds $107 a month to a $700,000 loan, The Guardian reported, or $532 across all five increases. SBS News cited Canstar figures of $77 a month on a $500,000 mortgage if banks pass on the rise in full. REA Group put the increase at about $154 a month for a median-value Sydney property.
Inflation reached 4.3 per cent in the year to September. The RBA now expects it to stay above 3 per cent until late 2027, about three quarters later than it previously forecast, and The Australia Today reported a headline peak of 4.5 per cent in the December quarter.
Bullock said global oil prices were part of the reason inflation would stay higher for longer, but "we are not tightening monetary policy because of the direct impact of oil prices on inflation", SBS News reported. She said the rises were aimed at domestic capacity pressures that were evident before oil prices climbed.
The Guardian reported RBA forecasts for growth of 1.6 per cent this year and 1.3 per cent in 2027. Unemployment is 4.7 per cent, and ABC News reported the bank now expects it to average 5.1 per cent in the December quarter of 2028. Bullock said the central forecast did not show a recession, though conditions would "make people feel like it's a recession".
Treasurer Jim Chalmers told ABC Radio the government would seek savings in December's mid-year budget update, SBS News reported. Opposition treasury spokesperson Tim Wilson said underlying inflation moved above the RBA's target band "seven months before a single bomb was dropped on Tehran".
The outlets differed in their reading of the RBA's next move. The Guardian said the absence of an explicit reference to further rises in the statement signalled a readiness to wait, while ABC News reported Bullock left the door open to more. The Australia Today reported ANZ sees a material risk of 5.10 per cent in December or February, while CBA expects a hold until cuts in August and November 2027. BetaShares economist David Bassanese told ABC News he expects a hold at the board's final meeting of the year next month and another rise in February.
Sources: The Guardian, RBA interest rates: Reserve Bank hikes cash rate for fifth time this year in blow to mortgage holders; ABC News, RBA lifts interest rates to highest level in 18 years to try to dampen inflation; SBS News, RBA's Cup Day call takes rates to 18-year high; board divided over decision — as it happened; The Australia Today, Fifth interest rate hike, $456 a month: how the RBA just made your mortgage hurt even more.
