The RESERVE BANK OF AUSTRALIA voted 6-3 to raise the cash rate 25bps to 4.85%,
the highest level since 2008 and the central bank's fifth hike in 2026. Three
board members dissented and the bank gave no clear signal on further tightening.
The RBA materially raised its inflation profile, projecting headline CPI to peak
at 4.5% in Q4 and both headline and trimmed-mean inflation to remain above 3%
through end-2027—about three quarters later than its August forecast. Inflation
is now projected to return to the 2.5% midpoint target only by mid-2028. The
bank cited higher fuel and commodity prices from the Middle East conflict,
stronger-than-expected domestic capacity pressure, and AI-driven demand for tech
goods as key upward drivers.
