Australia Lifts Cash Rate to 4.85 Percent, an 18 Year High, in a Split Vote

The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85 percent on Tuesday, November 3, the highest level in 18 years. The increase was the bank's fifth hike of 2026. Three of the nine board members voted against it and preferred to hold the rate at 4.60 percent, Reuters reported. The board vote was split 6 to 3.

A split board and softer wording

The RBA removed a reference to increasing the cash rate further if needed, Reuters reported. Markets read the split vote and the softer wording together as a signal that the bank may pause in December. The bank's next meeting is on December 8, 2026.

In its statement, the board said: "Given the revised inflation outlook and the continuing upside risks, the Board judged that a further tightening in financial conditions is warranted to support the return of inflation to target," Reuters reported.

Markets after the decision

The Australian dollar slipped 0.3 percent to $0.6979 after the decision. Three year government bond futures fell 3 ticks to 95.14, Reuters reported.

What five hikes mean for borrowers

The 125 basis points of tightening this year has more than reversed the 75 basis points of easing in 2025, Reuters and AAP reported. For an average mortgage holder with a $600,000 loan, the five rises in 2026 mean monthly interest repayments are more than $450 higher than they were in February, according to figures from comparison site Canstar reported by AAP.

That arithmetic is why the split vote matters beyond the rate itself. The three members who preferred to hold at 4.60 percent lost the vote, and the majority still chose to raise. At the same time, the removal of the reference to further increases if needed is the wording markets seized on after the decision, along with the 6 to 3 split. The Australian dollar and bond futures both moved lower in the first reaction, and the reading across market reports was that December may bring a pause rather than a sixth rise. The board itself has set no such course in the facts reported here. Its stated reason for Tuesday's move was the revised inflation outlook and the upside risks around it, and its next decision comes on December 8.

For households on variable rates, the immediate effect is the one Canstar measured: repayments on a $600,000 loan now run more than $450 a month higher in interest than in February, after five rises in a single year took the cash rate to a level last seen in 2008.