Australia's central bank raised rates a fifth time. Will it stop on 8 December?
The Reserve Bank of Australia raised its main rate to 4.85% on 3 November. Three of its nine board members voted to keep it at 4.60%.
What happened
On the Reserve Bank of Australia raised its cash rate target by 0.25 points to 4.85%, by six votes to three.
Six of the nine board members of the Reserve Bank of Australia voted on to raise the main rate to 4.85%. The other three wanted to keep it at 4.60%. It was the bank’s fifth rise this year, after February, March, May and September, and the rate is now the highest since 2008.
Five weeks earlier, on , the bank said it could raise the rate further if needed. On those words were gone. The bank said only that it would watch the data and the outlook. The governor, Michele Bullock, said the split vote did not mean the bank would not raise again if the risks to inflation came true.
About 4.5% is where the bank now expects inflation to be by the end of 2026, partly because fuel has cost more since the war in the Middle East began. Brent oil is back above $110 a barrel. The bank’s target is 2% to 3%, and it expects inflation to reach the top of that range only in late 2027.
Growth of 1.3% is what the bank expects for 2027, well below normal. Home prices have fallen sharply, and unemployment rose to 4.7% in September. National Australia Bank expects it may reach 5.4% by the end of next year.
is the board’s next decision and its last of the year. The one after that is on . Before December, the Australian Bureau of Statistics publishes jobs figures for October on and prices for October on .
Accordingly, the Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions.
Reserve Bank of Australia, statement by the Monetary Policy Board,
Sources: Reserve Bank of Australia (2, 3, 4), The Guardian (2, 3), Australian Bureau of Statistics (2)
The Pattern
We looked for cases where the Reserve Bank of Australia raised its rate at two or more meetings in a row, and its statement on the last rise said nothing about more rises. We found eight such meetings since 1990, from 2000 to 2026. Seven times the bank kept the rate at the next meeting.
Show the other 6 cases
The Read
Seven of the eight meetings ended in a pause, but the one exception looks most like now. In the same board raised the rate by five votes to four and said only that it would watch the data. In May it raised again, saying higher fuel prices were likely to push up the prices of other goods and services. Fuel is again a main reason the bank gives on . After the decision, financial markets put a rise before Christmas at about 12%.
Six of the eight meetings came from 2000 to 2010, when the board met every month except January and did not publish its votes. Now it meets eight times a year. None of the eight was the last meeting of a year, and is, with the next decision two months later. In seven of the eight, the bank’s next change was another rise, but the pauses lasted from three months to almost a year and a half, and a rise came within two meetings only twice. The three members who voted to wait wanted more data. The October jobs figures come out on and October prices on , both before the meeting.
Sources: Reserve Bank of Australia (2, 3, 4), The Guardian (2), Australian Bureau of Statistics
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