Reserve Bank Lifts Cash Rate to 4.85 Per Cent
The fifth rate rise this year pushes borrowing costs to their highest level since November 2008.
Updated on Nov. 3, 2026 in Inflation
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The Reserve Bank of Australia lifted the cash rate by 25 basis points to 4.85 per cent on Tuesday, 3 November 2026. It is the fifth increase this year and the highest cash rate since November 2008.
Why it matters
Lenders are expected to pass higher interest costs on to borrowers, further constraining borrowing capacity. Governor Michele Bullock said the central bank would keep raising the rate until inflation is brought back under control.
The Reserve Bank's decision lifted the cash rate to 4.85 per cent, while the latest consumer price index rose 4.3 per cent, driven largely by construction, electricity and petrol prices. Whether inflation will fall quickly enough to halt further increases remains unresolved.
The players
Reserve Bank of Australia
Australia's central bank, which sets the cash rate and is responsible for managing inflation and monetary policy.
Michele Bullock
Governor of the Reserve Bank of Australia, who said the bank would continue raising the rate until inflation returned under control.
The details
The increase is the second round of rate rises this year, following holds in June and August. Figures from comparison site Canstar show that for a 25-year loan in the Illawarra, where the median dwelling value is $1,022,212, monthly repayments rise by $128 to $5,645.
Timeline
May 2026: Federal government tax reforms prompt investors to leave the property market.
June 2026: The Reserve Bank holds the cash rate steady.
August 2026: The Reserve Bank holds the cash rate steady again.
3 November 2026: The Reserve Bank lifts the cash rate to 4.85 per cent.
Second half of 2027: Rate cuts are currently expected to become possible.
Macro View
The 4.85 per cent cash rate is the highest since November 2008, when the bank was last tightening into a high-inflation environment. The current cycle mirrors that period as the central bank responds to a 4.3 per cent rise in consumer prices.
Borrowers with variable-rate home loans face higher monthly repayments, with Illawarra households seeing an extra $128 per month. Lenders are expected to pass the increased interest costs on, which will reduce how much buyers can borrow.
The takeaway
Households with a mortgage should review their budget against higher repayments, as rate cuts are not expected until the second half of 2027.
Further reading
For broader context on price pressures, see Inflation coverage across Australia.
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