Australia's Reserve Bank raised its cash rate target by 0.25 percentage points to 4.85 percent, the highest level since late 2008, ABC News Australia and The Guardian reported^1,2.

ABC said the increase was the fifth this year and that six members of the monetary policy board voted for the rise while three voted to hold the target at 4.60 percent². The Guardian's live coverage also described a 6-3 vote and a fifth increase of 2026¹.

ABC said the bank is trying to keep inflation near 2.5 percent on average over the cycle and that officials had recently argued they could not let inflation expectations drift higher². The Guardian attributed the move to inflation it said rose to 4.3 percent in the year to September and to higher fuel prices tied to conflict in the Middle East¹.

ABC quoted Reserve Bank deputy governor Andrew Hauser from last month saying some businesses now treat 3 to 3.5 percent inflation as normal². "That is the central banker's nightmare," Hauser said, according to ABC².

The Guardian cited Canstar figures on higher monthly interest for a $700,000 home loan after this increase and across five 2026 hikes¹. ABC said households with mortgages would face higher costs while savers may earn more if banks pass through the change, and that it takes 12 to 18 months for a rate change to flow fully through the economy².

The Guardian reported Treasurer Jim Chalmers saying before the announcement that people were already under pressure and that higher borrowing costs would make things harder¹. It also reported New South Wales Premier Chris Minns cautioning against stopping the economy, and Prime Minister Anthony Albanese defending his government's cost-of-living work while at a Commonwealth meeting in Antigua and Barbuda¹. ABC's report did not carry those political comments².

The Guardian said the board judged further tightening warranted given a revised inflation outlook and upside risks, and that it would do what it considers necessary to return inflation to target¹. What the board will decide at later meetings was not settled in either report^1,2.