Reserve Bank lifts the cash rate to 4.85%, its highest since 2008, in a split 6-3 vote

The Reserve Bank of Australia raised its cash rate target by 25 basis points to 4.85% on Tuesday 3 November, its fifth rise this year and the highest level since 2008. This report draws on the Sydney Morning Herald, ABC News, AAP, and the Reserve Bank's statement and the transcript of Governor Michele Bullock's media conference. ## The decision Six board members voted to raise the rate and three to hold it at 4.60%, the Reserve Bank said. Inflation "is not expected to reach the top of the 2–3 per cent target range until late 2027, around three quarters later than previously forecast", the bank said, and "a further tightening in financial conditions is warranted to support the return of inflation to target." Financial markets believe the bank has finished raising rates and expect cuts early in 2028, the Herald reports. ## Update: reaction "Today the Board decided to increase the cash rate to 4.85 per cent. Now, I know this is not the news that many Australians want to hear, but it is what's needed to get inflation down," Bullock told her media conference, according to the Reserve Bank's transcript. She said the bank's central forecasts did not see a recession, but "it is going to make people feel like it's a recession because they feel poorer". "We are not looking to tip the economy into a recession if we can avoid it," she said. "We can play a helpful role and that's what we intend to do," Chalmers said, adding that there would be more savings in the mid-year budget update, the Herald reports. Opposition Leader Angus Taylor said: "if you've got public spending growing faster than the economy, you're stoking inflation," the Herald reports. ## Repayments The Herald says the rise adds almost $100 a month to repayments on a 30-year $600,000 mortgage. Separately, Canstar estimates that monthly interest repayments on a $600,000 loan are now more than $450 higher than in February, AAP reports.