Reserve Bank of Australia — Policy Preview

Decision due: Tuesday, 3 November 2026, 14:30 AEDT · Current cash rate target: 4.60%

1. Executive summary

The Reserve Bank of Australia is expected to raise the cash rate target by 25bp to 4.85% at the 3 November decision, the fifth increase of 2026. The September monthly CPI indicator and the Q3 trimmed-mean both landed above surveyed expectations, and the Board's own September minutes had already flagged that several of the upside risks identified in August had since materialised or were building; the Governor's Senate testimony published 28 October states that "some of the international and domestic upside risks to inflation have materialised or are materialising" (Bullock), and the Deputy Governor's remarks published 21 October reinforce that the inflation outlook has deteriorated since the August forecasts, with Hauser stating that "the inflation outlook looks materially worse than we projected in the August report". The single most important driver is the Q3 trimmed-mean CPI at 3.7%, which confirms that underlying inflation is not merely above the 2-3% band but still rising; the new forecasts published with this decision decide the bias beyond 3 November, not the call itself. The key risk is that the Board reads the sharp deterioration in activity and confidence data — services PMI at 47.8, employment down 39.3k, business confidence at -13 — as sufficient to pause, which surveyed consensus does not expect.

2. The call

Hike 25bp to 4.85%, with moderate-to-high conviction. The policy-rate history shows the cash rate at 4.60% after the 29 September increase, the fourth of 2026; underlying inflation has not yet turned. Surveyed economist consensus is for 4.85%, so the market and the survey agree with the call — there is no gap to trade on the decision itself. The trade, if there is one, sits in the path: the September minutes recorded market pricing of a further ~15bp by end-2026 and ~30bp in H1 2027 at the time of that meeting, and the question for 3 November is whether the new forecasts validate that residual tightening or cap it. What would have changed the call: a Q3 trimmed-mean at or below 3.6% alongside a stabilisation in the monthly indicator — neither happened.

3. The committee

Lean labels summarise RoboMacro's read of each member's public communications over the past six months, from Hawkish to Dovish. A lean is assigned where recent remarks carry a monetary-policy stance: 5 of 9 members currently qualify (Bullock, Hauser, Fry-McKibbin, Preston, Ross).

The recorded votes are unanimous at the two most recent meetings — unanimous (9-0 as recorded) on the 29 September hike to 4.60% and unanimous (9-0 as recorded) on the 11 August hold at 4.35% — and the Board publishes unattributed counts only, so no individual's dissent can be named. The earlier 2026 sequence is more informative about how the committee has moved: an 8-1 May hike and a 16 June hold recorded as unanimous. That arc — an 8-1 split in May narrowing to unanimity, then unanimity through the June hold and the September hike — describes a committee that converged on the tightening path rather than one being dragged along it. The Governor and Deputy Governor carry the hawkish leans and are the two members whose recent public remarks are most explicit about the inflation outlook; Fry-McKibbin and Preston are labelled Neutral in the table above on speech-score-derived reads, Ross leans dovish, and Hewson's recent remarks carried no monetary-policy stance. Melinda Cilento joined the Board on 1 September 2026.

4. Data since the last decision

No new release since the last decision for: Real GDP growth (QoQ), Real GDP growth (YoY), Wage price index (YoY), Household spending (MoM), Output gap (RoboMacro model estimate) — the committee sees the same print(s) it saw last time. Market rows are measured from the 29 Sep close — the last observation common to every market series on or before the last decision. Priors marked "revised" are the source's current vintage for that period, which differs from the figure as first published. Market rows span 5 days (28 Oct to 02 Nov) — not a single as-of snapshot. WTI (CME CL=F, USD/bbl) inter-meeting high 104.85 on 30 Oct (+16.8% from the decision close). WTI (CME CL=F, USD/bbl) latest after that official print is the CME daily close (CL=F via Yahoo), not a later EIA spot. Last EIA Cushing WTI spot on FRED is 103.37 on 27 Oct. The inflation data pull one way and only one way. The September monthly CPI indicator rose to 4.3% from 4.0%, 0.1pp above consensus; the monthly trimmed-mean rose to 3.6% from a revised 3.5%; the Q3 quarterly headline held at 3.9% while the Q3 trimmed-mean rose to 3.7% from 3.6%, 0.1pp above consensus. The quarterly trimmed-mean is the gauge that matters for this Board, and it is moving up, not down. Consumer inflation expectations rose to 5.3% in October from 4.9%, which the Deputy Governor's remarks published 21 October explicitly tie to the risk of expectations shifting away from the target.

The activity and labour data pull the other way, and hard. Employment fell 39.3k in September against consensus of +20.0k, a 59.3k miss, with unemployment at 4.7% (0.1pp above consensus) and unchanged on the month. Services PMI fell to 47.8 in October from 51.9, manufacturing sits at 49.6, NAB business confidence dropped to -13 from -8, Westpac consumer confidence fell to 80.4 from 84.4, and the August trade balance came in at 0.5bn against 2.0bn expected. The Q2 GDP prints (0.4% QoQ, 2.1% YoY) were already in front of the committee at the September meeting and are not new information; the output gap estimate of -0.32pp for Q2 is likewise unchanged and, sitting inside half a percentage point of zero, is not decisive on its own.

The outlook the Board is setting policy against: headline at 4.3% monthly and 3.9% quarterly, core at 3.6% monthly and 3.7% quarterly, all well above the 2-3% band, with WTI (CME CL=F close) up 7.3% over the inter-meeting window to 96.26, having spiked to 104.85 on 30 October before partially retracing — energy is pushing the headline away from target, not toward it. The September minutes attributed the July underlying surprise mainly to domestic capacity constraints rather than Middle East cost pass-through, and the Q3 trimmed-mean at 3.7% is consistent with that read. On activity, the output gap is modestly negative and the PMIs and confidence surveys point to demand running below trend; on labour, a 39.3k fall in employment with unemployment steady at 4.7% and wages at 3.2% describes a labour market loosening at the margin rather than collapsing. The inflation level and trajectory are doing the work in this call; the labour market is the constraint on how far the Board can go, not the reason to hold.

5. What the speeches say

6. Scenarios

7. Into the meeting

This is a projection round: the Board publishes its updated forecasts with the decision, and the revision to the inflation profile is the story. The September minutes recorded that the July underlying surprise was attributed mainly to domestic capacity constraints, and the Q3 trimmed-mean at 3.7% will force the staff to mark up the near-term inflation path relative to August. The question for the forecasts is whether the Board adds further tightening to the profile beyond this meeting or lifts its estimate of where the cash rate needs to settle — not whether the Board will signal easing. Watch the statement for whether the September formulation about doing what is necessary, including increasing the cash rate target further if needed is retained, and watch the press conference for how the Governor squares a further increase with the plainly weakening activity data. The market focal points are the 2Y yield at 4.95% and the 10Y at 5.21%, both lower over the inter-meeting window despite the hike being delivered — a curve that has already priced much of this.

After the decision, the scheduled releases include the September trade balance, the October NAB business confidence and November Westpac consumer confidence, and the minutes of this meeting. The most decision-relevant release is the October monthly CPI indicator, which will show whether the September acceleration to 4.3% was a one-off or the start of a new leg higher; Q3 GDP follows. The next meeting is 8 December.

Full analysis on the RoboMacro site → https://robomacro.com/central-banks/RBA