RBA raises cash rate to 4.85% in 6-3 vote

The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85% on November 3, its fifth increase of 2026, taking borrowing costs to their highest level since 2008. The board approved the move in a 6-3 vote, with three members preferring to leave the rate at 4.60%. The decision was made at the bank’s November policy meeting. The RBA said inflation remained elevated and broadly based. It cited higher fuel and commodity prices associated with the conflict in the Middle East, as well as rapid price growth in technology-related goods linked to artificial intelligence investment. The bank also said domestic capacity pressures were tighter than it had previously assessed. Revised staff forecasts put inflation’s return to the top of the RBA’s 2% to 3% target range in late 2027, about three quarters later than previously projected. The bank expects inflation to remain above 3% over the coming year and warned that higher inflation expectations could become entrenched. The RBA removed wording from its previous statement that explicitly referred to raising rates further if needed. It nevertheless said it would do what it considers necessary to return inflation sustainably...