RBA Set to Hike Rates as Minns Warns of Economic Risk

The Reserve Bank of Australia is expected to raise its cash rate by 0.25 percentage points on 3 November 2026, marking the fifth increase this year and pushing borrowing costs to their highest level in 18 years. According to The Guardian, the decision comes amid sustained inflationary pressure and mounting concerns from state and federal leaders about the economic impact of further tightening.

This story was first reported by The Guardian.

The move would lift the official cash rate to 4.85%, up from its current level of 4.60% set on 30 September 2026. September annual headline inflation stood at 4.3%, with trimmed-mean inflation at 3.6%, both remaining above the RBA's 2–3% target band.

What are state leaders saying about the rate hike?

NSW Premier Chris Minns has expressed deep concern about the cumulative effect of rate rises, warning that aggressive monetary tightening risks damaging the broader economy.

I know they've got a just difficult decision to make. I accept that, but we've got to be careful that in their efforts to slow down the economy, they don't stop it dead.

Minns emphasised that households are already stretched financially and unprepared for further cost-of-living pressures.

This is an extra hit to a pay packet that many people haven't budgeted for, are not ready for. It's going to have a massive impact on our economy.

The NSW premier argued that a rate increase would disproportionately affect his state due to elevated property values, which amplify the burden of higher mortgage repayments across the housing market.

How is the federal government responding?

Prime Minister Anthony Albanese has defended his administration's economic management while acknowledging the difficult circumstances facing households. Currently attending the Commonwealth heads of government meeting in Saint John's, Antigua and Barbuda, at the request of King Charles, Albanese has faced criticism for being overseas during the announcement.

We work each and every day on cost of living. What I recognise as well is that by engaging in the world, we can deal with our national security interests, but also make our economy stronger. That's why we need to engage in the world.

Treasurer Jim Chalmers told ABC's RN that Australians are bracing for a

difficult decision

and that people are already experiencing substantial financial pressure.

People are under substantial pressure already, and obviously, if rates go up today, that will make things much harder, especially when there are already a number of rate rises in the system and their full effect hasn't been felt yet.

What is the government's budget strategy?

When asked why Labor cannot guarantee net savings in the mid-year budget update, Chalmers explained that the government is conducting this analysis during November ahead of December's release.

We are currently working our way through the spending pressures, the economic forecasts, and the savings options to come up with the best, most responsible budget update that we can.

Chalmers noted that the government has achieved savings in all eight previous budget updates and expects to do so again.

There have been savings in all eight of our budget updates so far. There'll be savings in the ninth as well.

The powerful expenditure review committee met on Monday and is scheduled to reconvene on Wednesday to discuss potential savings measures.

Chalmers stressed that regardless of the RBA's independent decision, additional work remains to tighten the budget further.

Regardless of the decision that the Reserve Bank takes independently this afternoon, we know that there is more work to do to make the budget as tight as it can be.

What has led to this rate decision?

The RBA governor previously stated that inflation was "far too high" at a Senate estimates hearing, prompting all four major banks to expect a November rate increase. This decision follows a series of consecutive hikes that have already begun flowing through to household budgets, with the full impact of earlier increases still being felt across the economy.

What happens next?

The RBA is scheduled to publish its Monetary Policy Decision Statement and quarterly Statement on Monetary Policy at 2:30 pm AEDT on 3 November, followed by Governor Michele Bullock's press conference at 3:30 pm. The minutes of the November Monetary Policy Board meeting are scheduled for release on 17 November at 11:30 am AEDT.