RBA Hikes to 4.60% — Highest Cash Rate Since 2011

The Reserve Bank Board voted unanimously to raise the cash rate by 25 basis points to 4.60% at its 29 September meeting — the fourth hike of 2026 and the highest cash rate since 2011. The move matched the strong pre-meeting consensus: all four major banks and market pricing around 90-94% had pointed to a hike heading into today. The trigger wasn't a surprise domestic number — it was a worsening global picture, with the Board explicitly citing a broadening Middle East conflict and energy prices running well above what it had assumed in August.

What the Board Decided — and What It Said

The Board voted unanimously to lift the cash rate by 25 basis points to 4.60%. Unlike the August hold, this wasn't a finely balanced call dominated by domestic data — the statement points squarely at an external shock as the deciding factor.

The statement was explicit that recent inflation outcomes were "stronger than expected" and that "some of the upside risks flagged in August are materialising." Higher fuel prices have "partially been passed through to prices of other goods and services," and the Board's liaison program found firms "experiencing cost pressures and are either increasing the prices of their goods and services or looking to do so." The Board reiterated it "will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed" — language that keeps a further move squarely on the table.

Why This Was Expected — and What Changed

Heading into today, the consensus was strong: all four major banks (NAB, CommBank, ANZ, Westpac) had moved to forecasting a hike, and the ASX RBA Rate Tracker had climbed to around 90% by 23 September, up from 54% at the start of the month. The swing tracked two things — trimmed mean inflation stuck at 3.6% for a third straight month, and a fresh oil price shock from the renewed Iran conflict that pushed Australian petrol to around $2.11 a litre after the temporary fuel excise cut expired on 2 August without renewal (see our 29 September preview for the full breakdown and sources).

Today's decision followed that consensus exactly — no surprise here. What's notable is that the Board didn't need the August monthly CPI indicator to make the call: that release is still to come, expected in the days just after this meeting, so it played no part in today's decision. Instead, the deciding factor was the energy price shock intensifying faster than the Board had built into its August forecasts.

The Inflation and Jobs Picture the Board Faced

• Inflation: Headline CPI eased to 3.5% in July (from 3.8% in June), but the trimmed mean — the RBA's preferred measure — held at 3.6% for a third straight month. The August monthly CPI indicator lands after today's meeting, not before it.
• Labour market: Unemployment rose to 4.6% in August 2026 (from 4.5% in July) — its highest level since late 2021 — even though employment grew by 39,000 in the month, because more people joined the workforce and pushed participation up to 67.1%.
• Fuel and the Iran conflict: A renewed escalation pushed global oil above US$100/barrel and Australian petrol to ~$2.11/litre, compounded by the fuel excise relief expiring 2 August without renewal.

The Board's statement weighed these directly. The energy shock and firm-level cost pass-through were treated as the dominant, hike-supporting factors. The labour market, by contrast, was described as easing "broadly as expected" — not weak enough to argue against a hike, but not a reason for alarm either. In short: the external shock outweighed the case for patience that a softening jobs market might otherwise have supported.

What It Means for Your Mortgage

If you're on a variable rate, this increase flows through to your lender within the next billing cycle or two — most lenders pass on the full 25bp. On a typical variable rate, that's an extra $83–$124 a month depending on loan size (see the table below). And this may not be the last move this year: ANZ has already pencilled in a second hike to 4.85% in November.

What Should Borrowers Do Now?

Review your rate now, not after your next statement arrives. With a fourth hike this year now confirmed and a possible fifth flagged for November, the gap between what loyal borrowers pay and what's available in the market can be significant — often somewhere in the 0.5%–1.0% range. That gap doesn't shrink on its own, and it compounds with every hike the RBA makes. Whether or not ANZ's November call plays out, the time to check your rate is now, while the increase is fresh in your mind.

This article contains general information only and does not take into account your personal financial situation, needs or objectives. Consider your own circumstances and seek independent advice — including from us — before acting on anything here.

The bank forecasts, economist survey results and market-implied probabilities referenced in this article regarding future meetings are third-party estimates, not a guaranteed outcome — the RBA Board can and does decide differently from what markets and economists expect.

Sources: Reserve Bank of Australia, Monetary Policy Decision, 29 September 2026; ABS, Consumer Price Index Australia, July 2026; ABS, Labour Force Australia, August 2026 (unemployment rate rises to 4.6%); IEEFA, Australians Brace for Higher Fuel Prices as US-Iran Conflict Resumes; ABC News, Live Markets Coverage, 29 September 2026.