Monetary Policy Decision

Media Conference – 3 NOVEMBER 2026

Decision
The cash rate target increased by 25 basis points to 4.85 per cent. The policy decision was carried by a majority, with six members voting to increase the cash rate target and three voting to leave it unchanged.

Inflation
Headline and underlying inflation remain elevated. The Middle East conflict has escalated, with disruptions to global oil supplies continuing to place upward pressure on domestic and global energy prices. As the conflict remains unresolved, the risk of higher inflation and weaker economic activity has increased. AI-driven demand is fueling a sharp rise in global prices for technology-related goods. Firms experiencing cost pressures are increasing the prices of their goods and services. Inflation is now expected to remain elevated through much of 2027.

Economic and Labour Market Conditions
The economy is slowing, house prices have fallen significantly, and the unemployment rate has risen. Higher interest rates, alongside declines in housing prices and turnover, are expected to weigh on dwelling investment and household consumption. Meanwhile, overall business investment is forecast to strengthen in the near term, supported in part by data centre-related investment. Looking forward, resolution of conflict in the Middle East remains inconclusive, with heightened uncertainty around inflation pressure and weaker economic activity. Growth among Australia’s major trading partners has outpaced expectations, with AI-related investment offsetting the adverse effects of the Middle East conflict, though prolonged uncertainty and subdued productivity growth may constrain potential economic growth.

Monetary Policy Stance
Today’s decision is difficult for households with mortgages and businesses with loans, but high inflation hurts all Australians. The Board remains focused on preventing high inflation from becoming embedded. Achieving this requires the cash rate target to remain restrictive. The Board is committed to its mandate to deliver price stability and full employment.