Rate Announcement and History
Tuesday 29trh September 2026
At its meeting today, the Reserve Bank of Australia Board decided to increase the cash rate target by 25 basis points to 4.60 per cent.
Inflation remains elevated and some of the upside risks flagged in August are materialising. The conflict in the Middle East has broadened and global energy prices are now much higher than had been assumed in the August forecasts. AI-related demand is driving rapid growth in global prices for technology-related goods. And there remains pressure on domestic capacity. Liaison indicates that firms are experiencing cost pressures and are either increasing the prices of their goods and services or looking to do so. Short-term measures of inflation expectations remain elevated. And recent inflation outcomes in Australia were stronger than expected at the previous meeting.
There continue to be heightened uncertainties about the outlook for domestic economic activity and inflation. The Middle East conflict remains unresolved, and there are scenarios where inflation is higher and activity lower than forecast. Global oil supply disruptions are maintaining upward pressure on global and domestic energy prices and inflation. A period of prolonged uncertainty may also cause growth to be lower overseas and in Australia. To date, however, growth in Australia’s major trading partners has been stronger than expected, as the boost from AI-related investment has outweighed the adverse effects of the Middle East conflict. In Australia, weak productivity growth continues to constrain potential growth and there are uncertainties about the economic effects of the downturn in the housing market.
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. Accordingly, the Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. Monetary policy is well placed to respond to developments, and the Board is focused on its mandate to deliver price stability and full employment.
You can read the full statement from Michele Bullock, Governor of the Reserve Bank.
Why RBA rate decisions matter
RBA interest rate decisions are the key tool for the RBA to influence the Australian economy. They matter for a number of reasons, and affect people of all ages and circumstances:
- Deposit holders (including individuals and businesses) will experience this directly through the interest rates offered by banks. To some extent, this also applies to the cash and defensive assets within superannuation and other accounts.
- Borrowers (again, including individuals and businesses) feel the effects through the interest and principal repayments on variable rate loans. If you have a home loan, speak with our mortgage broking team about whether your current rate remains competitive.
- Lower interest rates tend to stimulate the economy, by improving cashflow for individuals and businesses with debt, as well as encouraging investment spending and employment. Conversely, higher rates restrict household and corporate budgets and spending, putting the brakes on the economy.
- Expectations of economic performance, along with other mechanisms for pricing financial markets, tend to provide a positive or negative environment for growth investments like shares and property, which feature heavily in most investors’ portfolios including super. Our financial planning team can help you assess how the current rate environment affects your investment strategy.
- For those in or approaching retirement planning, the rate environment directly influences income stream returns and the sustainability of pension drawdowns.
If you’d like to discuss how the current rate environment affects your financial position, contact us for a free initial discussion.