RBA lifts cash rate to 4.60 per cent, its fourth rise this year

The Reserve Bank of Australia has raised its cash rate target by 0.25 percentage points to 4.60 per cent. The Monetary Policy Board made the decision at its meeting on Tuesday 29 September, announced it at 2.30 pm, and the new target takes effect today.

It is the fourth rise of 2026, and it takes the cash rate to its highest level since October 2011, when the target was 4.75 per cent. The Board said the decision was unanimous.

"Inflation remains elevated and some of the upside risks flagged in August are materialising," the Board's statement began. Among them: a broadening conflict in the Middle East, with global energy prices "now much higher than had been assumed in the August forecasts"; fast-rising global prices for technology goods driven by demand linked to artificial intelligence; and continuing pressure on the economy's capacity at home.

Why the Board moved again

The statement said higher fuel prices had partly passed through to the prices of other goods and services, and that recent data suggested growth and inflation in Australia had both been higher than expected.

"The three increases in the cash rate target since the beginning of the year have tightened financial conditions and the economy appears to be slowing," it said. "But inflation is still too high and the Board judged that, in light of recent developments, a further tightening in financial conditions is warranted to support a return of inflation to target in a reasonable period."

It did not rule out more. 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."

How the year has gone

The Board began 2026 with the cash rate at 3.60 per cent, after three cuts in 2025. It has now raised the target at four of its six meetings this year:

The turn has been quick. In February the Board noted that "activity and prices in the housing market are also continuing to pick up". Its September statement said housing prices "have fallen in most capital cities and new housing loans have declined noticeably". The Australian Bureau of Statistics' lending figures, released on 14 August, show the number of new loan commitments for dwellings fell 5.4 per cent in the June quarter, seasonally adjusted: down 3.3 per cent for owner-occupiers and 8.6 per cent for investors.

What it has meant for home loan rates

Each of this year's three earlier rises moved the banks' standard variable home loan rate by the same quarter of a point. In the Reserve Bank's table of indicator lending rates it went from 8.02 per cent in January to 8.27 per cent in February, 8.52 per cent in March and 8.77 per cent in May, where it stood in August. A rise of the same size again would take it to 9.02 per cent, a level the table last recorded in September 2008.

The standard variable rate is a list price, and borrowers on average pay well under it. The Reserve Bank's figures put the average rate on outstanding owner-occupier variable loans at 5.5 per cent in January 2026 and 6.2 per cent in July. Three-year fixed rates for owner-occupiers in the indicator table rose from 5.99 per cent in January to 6.74 per cent in August.

The big banks pass it on in full

Within a day all four major banks said they would pass the rise on to their variable home loan customers in full. Commonwealth Bank moved first, and Westpac, NAB and ANZ followed on 30 September. Westpac's statement said it "will increase home loan variable interest rates by 0.25% p.a. for new and existing customers, effective 9 October". All four big banks' increases took effect on Friday 9 October, ten days after the Reserve Bank's decision.

Savers gain a little too. Westpac said the total variable rate on its Westpac Life savings account, including bonus interest, would rise by 0.25% p.a. to 5.25% p.a. from the same date. Other banks' savings rates vary, so it is worth checking whether yours has moved by the full amount.

Fixed-rate loans are not affected until their fixed term ends. Borrowers with a smaller lender should check that lender's announcement: each sets its own rates and timing, and not every lender moves by the same amount.

What a quarter of a point adds to repayments

For a borrower on a variable rate of 6 per cent, a 0.25 point rise to 6.25 per cent adds, on a 30-year principal and interest loan:

Assumptions: monthly repayments over a full 30-year term, fees not included. The single rise is from 6.00 to 6.25 per cent; the four rises are from 5.50 to 6.50 per cent. Illustrations from a market-average rate, not any lender's offer. Borrowers with less time left on their loan will see a smaller dollar change.

The Reserve Bank's average rate on outstanding owner-occupier variable loans rose from 5.5 per cent in January to 6.2 per cent in July, so for a typical existing borrower this year's rises have already added hundreds of dollars a month. Our $500,000 repayments page shows the full table at today's average rate.

The numbers behind the decision

The Board does not publish figures in its statement, but the data released either side of the meeting show what it was weighing.

Inflation. The Australian Bureau of Statistics' monthly Consumer Price Index, released on 30 September, the day the new rate took effect, showed annual inflation of 4.0 per cent in the 12 months to August 2026, up from 3.5 per cent to July. Trimmed mean inflation, the measure the Reserve Bank watches most closely because it strips out the biggest price swings, was 3.6 per cent, unchanged from July. Both are above the Reserve Bank's 2 to 3 per cent target band.

The ABS said the biggest contributions came from housing, up 5.7 per cent over the year with electricity up 13.2 per cent and new dwellings up 5.4 per cent, and from transport, up 5.6 per cent with automotive fuel up 13.5 per cent. Fuel and electricity are the energy prices the Board's statement pointed to.

Jobs. The labour market has softened, as the Board expected. The ABS's September labour force figures, released on 15 October, put the unemployment rate at 4.7 per cent, up 0.1 points, with employment down 39,300 in the month, seasonally adjusted.

Housing. The statement said housing prices "have fallen in most capital cities and new housing loans have declined noticeably", which matches the ABS lending figures above.

What happens next

The Board's next decision is due at 2.30 pm on Tuesday 3 November, after its meeting on 2 and 3 November. The ABS releases the September Consumer Price Index on 28 October, the last major inflation figure before the meeting. November is also one of the four meetings each year at which the Reserve Bank publishes its Statement on Monetary Policy, with updated forecasts for inflation, growth and unemployment, alongside the decision.

The big four banks' economists were split after the September decision. Westpac and ANZ expect one more rise in November, to 4.85 per cent; Commonwealth Bank and NAB expect the cash rate to stay at 4.60 per cent, though CommBank called a November rise "live". Our interest rate forecast page keeps each bank's call, with when and where they said it.

What borrowers can do now

• Check your new repayment. Your lender will tell you the new minimum repayment. If you pay by a fixed scheduled amount, check that it has been raised, or the shortfall can push your loan behind.
• Compare your rate with the average. The Reserve Bank's average for new owner-occupier variable loans is on our average home loan interest rate page. If yours is well above it, you are likely paying more than you need to.
• Ask your lender for a better rate. Moneysmart suggests telling your lender you plan to switch to a cheaper loan elsewhere: "To keep your business, your lender may reduce the interest rate on your current loan." A cut from your own lender costs nothing to arrange.
• If your fixed rate ends soon, find out what it rolls onto. Fixed borrowers are untouched by this rise until their fixed term ends; ask your lender now what rate will apply then, and compare it with the average for new variable loans.
• Weigh the cost of switching. If your lender will not move, refinancing may help, but Moneysmart lists the costs to check first: a break fee on a fixed loan, discharge and application fees, and lenders mortgage insurance if you have less than 20 per cent equity. How to refinance a home loan.
• If repayments are becoming hard to meet, contact your lender early. Lenders have hardship processes for borrowers who cannot meet their repayments, and asking before you fall behind gives you more options.

Every 2026 decision is on our RBA cash rate page, the banks' rates since 1959 are on the standard variable rate page, and what the big banks' economists expect next is in our interest rate forecast.

Related: RBA cash rate today: 4.60%, effective 30 September 2026

General information only, not credit or financial advice. We are not a lender or a broker and hold no Australian Credit Licence. Rates shown are RBA market averages, not offers.