RBA Hikes Cash Rate for Fourth Time in 2026 to 4.60% Amid Persistent Inflation

The Reserve Bank of Australia (RBA) has increased its cash rate by 25 basis points to 4.60%, marking the fourth interest rate hike in 2026. This move takes Australia's benchmark interest rate to its highest level in around 15 years as the central bank continues to tackle persistent inflation.

The RBA's Monetary Policy Board unanimously approved the increase, which brings the total rise in Australia's cash rate during 2026 to 100 basis points or one percentage point. The central bank had previously raised rates three times this year before keeping the rate unchanged at its August meeting.

Persistent inflation was a key factor behind the latest decision, with Australia's underlying inflation remaining above the RBA's preferred range of 2% to 3%. Higher energy costs have also added to price pressures, and the central bank has pointed to capacity pressures in the Australian economy and weak productivity growth as further concerns.

The higher cash rate can increase borrowing costs for households and businesses, particularly for borrowers with variable-rate mortgages. Banks may pass on the higher official rate through increased lending rates, leading to higher monthly repayments for mortgage holders while savers may see higher returns on some deposits if banks increase savings and term-deposit rates.