The Reserve Bank of Australia goes into its November 3 decision with the forecast community aligned behind a hike. Commonwealth Bank and ANZ both moved to forecast a November increase after the September inflation data, Westpac reaffirmed its hike call, and NAB also now expects a 25 basis point rise. Markets lifted the odds of a hike to about 85 percent, from 69 percent before the inflation release. A rise would lift the cash rate to 4.85 percent, the fifth increase of 2026 after moves on February 3, March 17, May 5 and September 29 took it from 3.60 percent to 4.60 percent, and the highest level since 2008.
The data left the board little room. Headline CPI rose 4.3 percent in the year to September, up from 4.0 percent in August. Trimmed mean inflation rose 1.0 percent over the September quarter, above the RBA’s own August forecast of 0.8 percent, and 3.7 percent on the year. ING notes that almost all of the 90 basis point increase in headline inflation from July to September traces to higher transport costs, largely fuel, but that goods and services inflation have both picked up above 4 percent, suggesting energy costs are feeding more broadly through the economy.
The banks differ on what follows, not on November. CBA called the expected move an insurance hike against risks from the Middle East, the AI investment boom and tight capacity, and sees holds in December and February. ANZ singled out market services inflation, its strongest since 2024. Westpac does not expect further hikes in its base case but says the risk of another move, most likely in February, has risen.
The complication is the labour market. Unemployment rose to 4.7 percent in September as employment fell by 39,300, so the RBA would be tightening into rising unemployment, unlike earlier in the cycle. The board meets on November 2 and 3 and publishes updated forecasts alongside the decision on the afternoon of November 3.