The RBA raised rates on Melbourne Cup Day. Will it have to go again?

At 2.30pm AEDT on 3 November, the Reserve Bank lifted the cash rate by 0.25 percentage points to 4.85%. It was the fifth rise of 2026. Six board members voted to hike and three wanted to hold. RBA

The ABC reports the rate is now at its highest level since late 2008. Markets had priced the move at about 89% before the announcement. ABC

For borrowers, the pain keeps stacking up. Canstar told the ABC that repayments on a $600,000 loan are now about $456 a month higher than in January. ABC On our maths, this rise alone adds about $124 a month to a $750,000, 30-year loan.

Natasha Luscri-Miller bought a unit through the 5% deposit scheme. After the September rise, she asked how much more borrowers would be squeezed "before you're satisfied". ABC The board has answered with another rise, so the question now is whether it stops here.

Probably not in December. The governor has called this a good moment to take stock, three members already wanted to hold, and the jobs market is softening.

Confidence: Likely (hold on 8 December). A rise in February 2027 is a real risk if inflation stays hot. Three things decide it: the inflation data, the jobs data and the board's own words.

The figure the board was waiting for landed on 28 October. The trimmed mean, which drops the biggest price jumps and falls to show the trend, rose 1.0% in the September quarter. ABS

That was the hike threshold this newsletter set out on 21 October. It works out to a 4% annual pace, well above the 2% to 3% target.

Headline inflation rose to 4.3% in the year to September, from 4.0% in August. Fuel jumped 9.4% in September after a 14.8% rise in August. ABS

The RBA now expects inflation to stay above 3% for the coming year. It does not see it back at the top of the target until late 2027, about three quarters later than it forecast in August. RBA

Australia is not alone in this bind. Bank of Canada governor Tiff Macklem said on 17 October that the risk of inflation spreading had gone up as oil surged. Reuters via Investing.com Central banks everywhere are trying to stop an oil shock turning into a habit.

The tone of the statement matters as much as the move. The board said policy is "well placed to respond to developments". RBA

At her press conference, Governor Michele Bullock said it was "probably a good point to just take stock". She also said she did not know what the next move would be. ABC

UBS economist George Tharenou called the statement dovish, because it dropped its bias towards more tightening. Capital Economics' Marcel Thieliant thinks the bank has finished raising rates, and CBA expects a hold until cuts in August 2027. ABC

Employment fell by 39,000 in September and unemployment rose to 4.7%. The trend rate held at 4.6%. ABS

Big employers are cutting. NAB announced up to 2,500 job cuts on 20 October, about 6% of its staff, and BHP confirmed cuts in its WA iron ore business. ABC

The RBA now expects unemployment to rise further than it forecast in August. It also says house prices have fallen significantly and growth will slow over the coming year. RBA Five rises are still working through the economy, and the full effect takes many months to show.

Betashares chief economist David Bassanese expects at least one more rise, with February 2027 as his base case. KPMG's Brendan Rynne said the split vote raises the question of more rises late this year or early next. ABC

That case has real weight. Deputy governor Andrew Hauser warned on 21 October that a growing share of firms treat 3% to 3.5% inflation as normal. He called drifting expectations "the central banker's nightmare". RBA

The board's statement repeats that worry and says firms are passing on fuel costs. If the October figures show that spreading, the pause could be short. Where the hawkish case is weaker is timing: the board has just said it wants to watch, and December leaves it only one more monthly inflation reading.

Nobody knows how the three dissenters will vote next time, or whether more members will join them. The full Statement on Monetary Policy has the detailed forecasts, and the minutes will explain the split. The verdict assumes oil does not spike again before December.

The RBA raised rates on Melbourne Cup Day, and it probably will not go again on 8 December. Confidence: Likely. February 2027 is the bigger risk, and it turns on whether firms keep passing on higher costs.

The politics split along familiar lines. Treasurer Jim Chalmers pointed to global factors such as the Middle East war, while Opposition Leader Angus Taylor blamed government spending. ABC Macquarie was the first lender to pass on the rise, with higher variable rates from 19 November.

Savers should gain a little too, because Macquarie is also lifting some savings rates. The ABC has reported, though, that savings accounts were slow to reflect earlier rises. ABC

This piece draws on 21 sources: ten primary documents from the RBA and ABS, original ABC reporting, a Reuters report on Canada, market and bank economists' published calls, and background kept from the original preview. It was first written on 21 October 2026 as a preview of the decision and was refreshed on 3 November 2026 after the board announced it. The $124 monthly figure is our own calculation, using a 30-year loan with a variable rate rising from 6.49% to 6.74%; the 6.74% average comes from Canstar via the ABC. The 4.8% jobs threshold is our judgement, not a published forecast. Researched with AI tools; checked and edited by VOID.

The Reserve Bank raised interest rates again on Melbourne Cup Day, to 4.85%, because underlying inflation is still running at about 4%. But three of the nine board members wanted to wait, and the governor said it was a good time to take stock. So another rise in December looks unlikely, though February is possible if prices keep climbing.