Thank you for joining our live coverage of the Reserve Bank of Australia (RBA) monetary policy board\u2019s second-last meeting of the year. The RBA has raised the cash rate target to an 18-year high of 4.85%.<\/p>\n
Jump to key updates<\/p>\n
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The RBA has increased the cash rate to 4.85%, the highest level in 18 years. RBA governor Michele Bullock is addressing media at a press conference. Picture: NewsWire \/ Christian Gilles<\/p>\n
Thank you for joining us for today\u2019s RBA decision<\/p>\n
4:30pm<\/p>\n
Thank you for following along with our afternoon coverage of today\u2019s Reserve Bank MPB meeting. To recap, the board has decided to increase the cash rate by a further 0.25%, bringing it to an 18-year high of 4.85%.<\/p>\n
Governor Michele Bullock has attributed the hike to Australia’s own inflation problems rather than the Iran War, noting the domestic issues are being viewed in hindsight as worse than initially thought.<\/p>\n
Today\u2019s decision was the culmination of the board\u2019s second-to-last meeting for the 2026, with households still potentially in line for more tightening ahead of Christmas.<\/p>\n
As we head towards the final cash rate decision for the year, keep up to date with all the news on realestate.com.au and Mortgage Choice. This includes regular news and outlooks, along with analysis from our editors and team of in-house economists.<\/p>\n
RBA: \u201cPeople will feel like it\u2019s a recession\u201d<\/p>\n
4:14pm<\/p>\n
Australia is not forecast to enter a recession, but households are likely to feel they are in one as the current climate makes consumers feel poorer, RBA governor Michele Bullock has warned.<\/p>\n
The governor has used this afternoon\u2019s post MPB meeting press conference to reiterate the bank\u2019s view that its forecasts do not show Australia entering recession, but said slowing the economy remained a vital step to rein in high inflation.<\/p>\n
\u201cThis is a manifestation of a lack of productivity growth and the fact that we\u2019ve had this massive supply shock imposed upon us,\u201d she said.<\/p>\n
\u201cWe don\u2019t want to put the economy into recession, we do have a dual mandate, and although we are focusing on inflation at the moment because we\u2019ve thought that the upside risks or costs were higher, we haven\u2019t lost site of the fact that we want to try and maintain the gains in the labour market.\u201d<\/p>\n
Governor Bullock: RBA \u201cis very uncomfortable\u201d<\/p>\n
4:02pm<\/p>\n
The RBA is grappling with having extended its forecast for the inflation outlook, with Michele Bullock acknowledging Australia \u201cis not in a good situation\u201d.<\/p>\n
Answering journalists\u2019 questions following the RBA\u2019s fifth rate hike for 2026, the governor warned the bank was \u201cvery uncomfortable\u201d with the nation\u2019s current climate. In the first split vote in several months, three of nine MPB members had wanted today\u2019s hike held off until more information on downside risks is available.<\/p>\n
\u201cIt wasn\u2019t that both sides didn\u2019t recognise risks on either side, but those [board members] looking for a hold today were thinking that housing has reacted, the unemployment rate is lifting up and there is no sign of wage growth accelerating,\u201d Ms Bullock said.<\/p>\n
\u201cThey felt there were potential downside risks in those circumstances, particularly as we had already done four interest rate rises.\u201d<\/p>\n
Rate hike aimed at domestic pressures, governor says<\/p>\n
3:47pm<\/p>\n
Continuing rate hikes from the Reserve Bank are related to Australia\u2019s own domestic inflation issues, which governor Michele Bullock now says are now viewed as having been a larger contributor than the bank initially thought.<\/p>\n
Addressing media this afternoon following the RBA board\u2019s decision to increase the cash rate to an 18-year high of 4.85%, Ms Bullock said she wanted to close the lid on public misinterpretation of the board\u2019s motives.<\/p>\n
\u201cI want to be very clear that we are not tightening monetary policy because of the direct impact of oil prices on inflation,\u201d she said. \u201cI know there is confusion in the community, so I want to be very clear. Monetary policy cannot impact global oil prices.\u201d<\/p>\n
Supply and demand balance is the key issue conflating Australia\u2019s inflation pressures, with the governor specifically pointing to strong investment, particularly in AI data centre costs.<\/p>\n
RBA governor Michele Bullock to face the media<\/p>\n
3:27pm<\/p>\n
Governor Michele Bullock is set to appear in front of journalists shortly in her regular scheduled post-rates decision press conference. Ms Bullock is expected to set the tone for the board\u2019s approach coming into this week and provide the contextual factors leading to the decision to hike rates, as well as speak through the different options the board considered.<\/p>\n
Ms Bullock is expected to then face questions on RBA executives\u2019 recent comments on the likelihood of a recession in Australia, as well as the bank\u2019s forecasting for further price drops in the struggling property market.<\/p>\n
Employment data concerns are likely to be covered, along with the board\u2019s update view on the path forward for both headline and underlying inflation off the back of last week\u2019s September data.<\/p>\n
Forecasts for how the rest of the year is likely to play out are also expected, building on the comments shared by the MPB in its earlier statement.<\/p>\n
Rate hikes still the answer for RBA<\/p>\n
3:13pm<\/p>\n
This afternoon\u2019s latest cash rate hike marks the fifth increase to interest rates in just nine months, with the bank confirming the tightening is successfully changing conditions and encouraging consumers and businesses to spend less.<\/p>\n
It comes despite no noticeable improvement in the level of underlying inflation in more than six months, with recent data from the ABS also showing headline inflation is continuing to move in the wrong direction.<\/p>\n
The bank\u2019s post-rate decision statement, published earlier this afternoon, notes its actions are expected to continue pushing inflation back towards its 2-3% target range.<\/p>\n
\u201cThe economy is slowing, housing prices have fallen significantly and the unemployment rate has risen,\u201d the statement read. \u201cThe forecasts see growth in output slowing further over the coming year, which is expected to reduce capacity pressures.\u201d<\/p>\n
RBA split over today\u2019s cash rate hike<\/p>\n
2:59pm<\/p>\n
Six of the Reserve Bank monetary policy board members vote to raise the cash rate this month, while three members signalled it should remain on hold. Today marks the first divisive decision from the board in several months and comes alongside several concerning warnings.<\/p>\n
In a statement released this afternoon alongside its decision to hike the cash rate, the board confirmed high inflation was inching closer towards being considered the norm in Australia. This has long been a well-communicated fear for the RBA, which says it relies strongly on public trust that low inflation can be maintained.<\/p>\n
\u201cInflation is now expected to remain above 3% for the coming year and there is an increasing risk that higher inflation expectations will become embedded,\u201d the statement read.<\/p>\n
\u201cThe inflation outlook has also been revised materially higher in the updated staff forecasts. This partly reflects higher fuel and other commodity prices affected by the conflict in the Middle East but domestic capacity pressures are also judged to have been a little tighter than earlier thought.\u201d<\/p>\n
Fifth RBA hike takes us back to the GFC days<\/p>\n
2:46pm<\/p>\n
The new cash rate of 4.85% confirmed by the Reserve Bank this afternoon is set to place most Aussie households with a mortgage in a position with repayments they have never experienced.<\/p>\n
Today\u2019s property market also looks noticeably different from how it did in the years after the GFC. Economic capacity concerns were motivating the RBA to keep interest rates high as the nation experienced a strong resources boom, while Australia\u2019s property market back then was worth $4.4trn. By comparison, the latest ABS data shows the total value of property has now almost tripled to $12.7trn as of June.<\/p>\n
Approximately 20% more households held a mortgage in 2021 compared to in 2011, according to the ABS, while the average new loan size for an owner-occupier almost doubled in that ten-year period alone.<\/p>\n
However, a different economic and lending environment 15 years ago meant households grappled with distinct balances between housing costs, incomes, employment levels and debt.<\/p>\n
Read more: The suburbs where home prices have grown most since interest rates were this high<\/a><\/p>\n RBA hikes the cash rate to 18-year high of 4.85%<\/p>\n 2:30pm<\/p>\n The Reserve Bank has confirmed the cash rate will rise to 4.85% \u2013 a move which brings rates to the highest level seen since November 2008 when Australia was in the midst of the Global Financial Crisis.<\/p>\n While the widely expected decision won\u2019t be a surprise to households, borrowers are unlikely to welcome further increases to minimum mortgage repayments, while the squeeze seen in the property market is also expected to continue.<\/p>\n Today\u2019s decision marks the fifth rate hike from the Reserve Bank this year, keeping households on their toes as high fuel and food prices continue to become the new norm for many.<\/p>\n The RBA board\u2019s statement that accompanies today\u2019s decision will be published shortly. An insight into board members\u2019 deliberations over the last 48 hours will be central, along with latest outlooks for inflation pressures, economic growth and broader market conditions in the run up to the end of the year. It will also reveal how united the nine MPB members were on the decision.<\/p>\n Read more: RBA lifts cash rate to 4.85% in fifth hike this year<\/a><\/p>\n Markets lock in a rate hike from the RBA<\/p>\n 2:17pm<\/p>\n Market expectations for today\u2019s rates decision have leaned heavily towards a hike over the past week in particular, with latest data from the Australian Stock Exchange showing pricing was trading at 95.22 as of Monday. This means there is an 80% expectation for the cash rate to rise.<\/p>\n Leading economists and all four of the nation\u2019s biggest home loan lenders are forecasting a rate hike, thanks continuing concern around high inflation after last week\u2019s ABS data and the RBA\u2019s strong messaging around the likely need for further tightening.<\/p>\n While last month\u2019s rate hike was the first since May, another today is set to significantly challenge stretched households in the lead up to Christmas after a small bit of breathing room over winter.<\/p>\n The RBA Rate Indicator calculates the probability of a rate change using market-determined pricing from the ASX 30-Day Interbank Cash Rate Futures.<\/p>\n Read more: Surging inflation raises RBA rate hike risk, threatening worst housing slump since 1987<\/a><\/p>\n RBA says there are \u2018no signs\u2019 of a recession<\/p>\n 2:01pm<\/p>\n The Reserve Bank is continuing to rule out any concerns about recession, despite stalling economic growth, rising unemployment and serious concerns over Australia\u2019s productivity and demand and supply balance.<\/p>\n Governor Michelle Bullock, deputy governor Andrew Hauser and assistant governor Sarah Hunter appeared in front of the Senate Economics Legislation Committee in Canberra last week, facing questions as to whether its rate hikes were grinding the nation\u2019s economy to halt.<\/p>\n \u201cI recognise that higher interest rates can be difficult, particularly for households with mortgages who are also facing cost-of-living pressures but we can\u2019t allow high inflation to persist,\u201d Ms Bullock said. \u201cHigh inflation hurts everyone. It means higher grocery costs, higher rent, and higher electricity bills.\u201d<\/p>\n The RBA executives said they did not forsee a recession in the medium-term, with Dr Hunter confirming \u201cnone\u201d of the indicators the bank monitors currently suggest Australia is even heading towards a recession-like situation.<\/p>\n Read more: Recession fears surges as high inflation force\u2019s RBA\u2019s hand<\/a><\/p>\n Big four banks say RBA will hike the cash rate<\/p>\n 1:47 pm<\/p>\n All four of Australia\u2019s big four banks are expecting the RBA to hike the cash rate today, with Westpac and ANZ having locked in the grim forecast several weeks back.<\/p>\n \u201cThe RBA is especially worried that above-target inflation will become embedded in people\u2019s expectations and pricing decisions,\u201d Westpac chief economist Luci Ellis said. \u201cThe RBA has also made it clear that it is down-weighting the recent easing in the labour market, even though this was more than it forecast.\u201d<\/p>\n National Australia Bank was slower to move away from its expectation for a hold, with the nation\u2019s largest lender, Commonwealth Bank, also keeping its hold forecast in place until the release of September quarter inflation data last week.<\/p>\n \u201cRecent RBA communication has emphasised upside inflation risks and domestic capacity constraints,\u201d CBA senior economics Ashwin Clarke said. \u201cThere remains a risk of further rate hikes. We now expect the RBA to raise the cash rate by 25 basis points.\u201d<\/p>\n Read more: Big bank job cuts could halt RBA rate hikes as unemployment rises<\/a><\/p>\n RBA comments put pressure on government spending<\/p>\n 1:31pm<\/p>\n Coming into today\u2019s decision, deputy governor Sarah Hunter made a rare television appearance, choosing to have Channel 9\u2019s 60 Minutes come inside the RBA to hear her explanation of the work the bank undertakes day to day.<\/p>\n Dr Hunter acknowledged in the interview that government spending is contributing to demand, which in turn is pushing up inflation. With households feeling the pinch of increased mortgage costs, food and fuel prices, Dr Hunter was asked if government spending needed to be reined in as an alternative.<\/p>\n She said the RBA could not \u201ctell politicians what governments should or shouldn\u2019t spend money on\u201d, saying Aussies should instead \u201chave their say at the ballot box\u201d.<\/p>\n Dr Hunter also warned the end of the year will be challenging for many households, saying the trade off pain of high interest rates \u201cweighed heavily on the board\u201d, as did the knowledge the most pressured homeowners might be pushed to sell as repayment costs become unmanageable.<\/p>\n Read more: RBA warns it can\u2019t tell the government to rein in spending<\/a><\/p>\n Economist prediction: RBA to hike rates<\/p>\n 1:17pm<\/p>\n With inflation still high, and higher than the RBA had forecast back in August, realestate.com.au executive manager of economics Angus Moore said it is \u201chard to see the RBA doing anything but hiking\u201d this month.<\/p>\n The bank has been clear in its communications that it will not hesitate to continue raising rates if it feels it is necessary. It also will not be swayed by approaches being taken by other central banks across the globe.<\/p>\n \u201cTheir recent public commentary has focused squarely on their concerns about inflation,\u201d Mr Moore added. \u201cThe September quarter inflation data we got last week won’t have assuaged those concerns.\u201d<\/p>\n Underlying inflation has yet to reach a clear peak and has been sitting around the same level since June. Expectations from the bank are grim, with its identified upside risks \u2013 factors which place pressure on inflation \u2013 continuing to grow.<\/p>\n Read more: Has spring sprung, or at least hopped?<\/a><\/p>\n Inflation peak yet to come despite RBA tightening<\/p>\n 1:04pm<\/p>\n Homeowners, renters and borrowers were expecting to have seen the back of rate hikes after the RBA\u2019s decision to hold off on tightening in both June and August. The reason for the pause, according to the bank, was to see how its three earlier rate hikes would impact the economy.<\/p>\n Despite hope for some longer-term reprieve, the bank now says more tightening is likely necessary, with a potential rate hike today set to bring the total for 2026 to five.<\/p>\n The RBA has been hoping that an inflation peak would present itself in the ABS\u2019 data, with the bank and government initially forecasting June as the most likely time. Despite this, inflation has not budged since then, leaving the RBA struggling to forecast a reliable timeline for cooling.<\/p>\n The last time the Reserve Bank raised rates five times or more in one calendar year was 2022, when eight hikes were pushed through between May and December off the back of Australia\u2019s economic recovery from Covid-19.<\/p>\n Read more: November rate hike likely locked in as high inflation lingers<\/a><\/p>\n Housing market continues to struggle<\/p>\n 12:51pm<\/p>\n Australia\u2019s housing market has now reach six months in downturn, with the latest Home Price Index showing Darwin \u2013 the nation\u2019s most affordable capital \u2013 is the only major city not to have had a further downturn throughout October.<\/p>\n Values dropped most in Adelaide (-0.6%) over October, with Sydney and Brisbane both sliding down by 0.4%. Less of an impact was felt less across the other capitals, with prices in Darwin holding flat.<\/p>\n The national median home price was down by 0.3% to $871,000. By comparison, the March peak for property prices placed the median in Australia at $908,000.<\/p>\n Read more: realestate.com.au Home Price Report \u2013 October 2026<\/a><\/p>\n RBA executives warn the worst is yet to come<\/p>\n 12:33pm<\/p>\n The RBA\u2019s executives have undertaken a range of different media appearances in recent weeks, clocking up a higher than usual number of public appearances since the MPB\u2019s last meeting at the end of September.<\/p>\n Deputy governor Andrew Hauser and assistant governor Sarah Hunter have used television and event appearances to send a clear message to households that Australia\u2019s economic situation is likely to get worse before it improves.<\/p>\n Speaking at a Citi conference, Mr Hauser said the RBA was \u201cfacing hard choices\u201d as it struggled to accurately forecast the path ahead for interest rates. He added risks to high inflation were rising, adding the outlook now is \u201cmaterially worse\u201d than the RBA had expected back in August.<\/p>\n Dr Hunter used an appearance on 60 Minutes at the start of last week to defend the bank\u2019s excessive tightening, acknowledging increasing oil prices did not bode well for the trajectory of interest rates.<\/p>\n Read more: RBA hints at more rate hikes flagging unravelling public trust concerns<\/a><\/p>\n RBA poised for Covid-style consecutive hike record<\/p>\n 12:16pm<\/p>\n A crunch of RBA rate decisions between 1990 and 2026 reveals November is the most common month for the bank to hike rates, but when did households last face five rate hikes in one calendar year?<\/p>\n While today\u2019s decision from the RBA could put the cash rate back to a position not seen since 2008, it was far more recently that the bank went down such a tough path of tightening.<\/p>\n The bumpy economic recovery from Covid saw eight consecutive rate hikes in Australia in 2022, taking the cash rate from 0.1% to 3.1% in the space of eight months. This was followed by five more rate hikes in 2023, spaced out in a similar pattern to what the MPB has decided on during 2026.<\/p>\n With Black Friday and Cyber Monday set to hit later this month to coincide with the start of traditional Christmas demand, the bank is likely to take action now to deter households from further adding to inflation with seasonal spending.<\/p>\n