Reserve Bank of Australia raises official cash rate to 4.60% in fourth increase of 2026

The Reserve Bank of Australia (RBA) has increased the official cash rate by 25 basis points to 4.60%, marking its fourth interest rate rise of 2026.

The Monetary Policy Board said in its statement accompanying the decision that inflation remained elevated, with some of the risks it identified at its August meeting now materialising.

The move follows three increases in the cash rate since the beginning of the year and means rates have risen by a total of 100 basis points in 2026.

The Board said recent inflation outcomes in Australia had been stronger than had been expected at its previous meeting. Higher global energy prices and domestic capacity pressures were also adding to the inflation outlook.

The Reserve Bank of Australia (RBA) has increased the official cash rate by 25 basis points to 4.60%, marking its fourth interest rate rise of 2026.

The Monetary Policy Board said in its statement accompanying the decision that inflation remained elevated, with some of the risks it identified at its August meeting now materialising.

The move follows three increases in the cash rate since the beginning of the year and means rates have risen by a total of 100 basis points in 2026.

The Board said recent inflation outcomes in Australia had been stronger than had been expected at its previous meeting. Higher global energy prices and domestic capacity pressures were also adding to the inflation outlook.

The decision to increase the cash rate was unanimous.

Why did the RBA raise rates?

The RBA pointed to several sources of inflation pressure, including pressure on domestic capacity , as well as the widening conflict in the Middle East and higher global energy prices.

It said AI-related demand was also driving rapid growth in global prices for technology-related goods, while Australian firms continued to face cost pressures.

The RBA said discussions with businesses indicated firms were either raising prices or considering doing so, while short-term measures of inflation expectations remained elevated.

“Since the previous meeting, some of the upside risks to inflation are materialising,” the Board said.

“There have been further disruptions to global oil supply and recent data suggest that growth and inflation in Australia have been higher than expected.”

Higher fuel prices were also starting to flow through to the prices of other goods and services, adding to existing capacity pressures in the economy.

Economy showing signs of slowing

The RBA said growth in economic output had slowed, although the June quarter was slightly stronger than expected.

Consumer spending was gradually easing, while housing prices had fallen in most capital cities and new housing loans had declined noticeably.

Labour market conditions had also eased broadly as expected in recent months.

At the same time, the RBA said business investment and debt continued to grow strongly and weak productivity growth was constraining the economy’s potential growth.

The Board said the three earlier rate increases this year had tightened financial conditions and the economy appeared to be slowing.

“But inflation is still too high and the Board judged that, in light of recent developments, a further tightening in financial conditions is warranted to support a return of inflation to target in a reasonable period,” it said.

Could interest rates rise again?

CBA Senior Economist Ashwin Clarke said there were signs this year’s interest rate increases were having the RBA’s intended effect and slowing the economy.

“But it takes time to have their full effect - it can take up to 18 months,” he said.

In its statement, the RBA left the door open to further increases in the official cash rate if required.

“The Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed,” it said.

The RBA said it would continue to assess incoming economic data and changes in the outlook and risks when making future decisions.

Clarke said CBA still saw the risks to the outlook as tilted towards further rate rises, but he said CommBank expected the economy to slow enough for the RBA to eventually begin cutting rates late next year.

“We do think the economy will slow enough that the RBA gains confidence that the economy and inflation are on the right track,” he said. That would potentially open the door for rate cuts in August and November 2027, Clarke said.