RBA Hits Households Again: Cash Rate Climbs to 4.60% — Highest in 15 Years

At its 28–29 September meeting, the Reserve Bank of Australia announced its fourth rate increase for 2026, boosting the cash rate objective by 25 basis points to 4.60%—a unanimous decision that ends a two-meeting pause and drives borrowing costs to their highest level since 2011. The Board indicated that more tightening "is warranted," so leaving the door open for more rises before year-end, given headline inflation of 3.5% and core inflation of 3.6%, both well over the 2–3% target band. Key causes were said to be worldwide oil supply interruptions and stubbornly sluggish disinflation; Governor Michele Bullock admitted the pain for families but stressed that "reducing inflation is essential."

The direct result for mortgage holders is that average owner-occupier loan rates currently range at 6.5%, therefore increasing repayments on an $800,000 loan by around $120 each month. Australia's cash rate is currently the second-highest in the developed world, behind only Iceland, and big banks like ANZ predict at least one more rise before end-2026 with rates expected to remain high through most of 2027 before slowly falling.

Markets are currently looking to the September-quarter inflation figures released a day after the decision together with the RBA's Monetary Policy Statement and Governor Bullock's press conference for hints on the rate of more tightening. The choice also represents the first significant test of the revised monetary policy framework that went live on March 1, 2025 following the 2022–23 RBA Review, which divided the board into separate Monetary Policy and Governance panels for more accountability and openness.