RBA interest rate expected to rise to 4.85%

• An interest rate of 4.85% is expected in November as the Reserve Bank of Australia prepares to tighten policy.
• Upside inflation risks have materialised, according to RBA Governor Michele Bullock.
• Despite improved market sentiment, the Australian Dollar remains weak before the decision.

A 25 basis point (bps) increase in the Official Cash Rate (OCR), from 4.6% to 4.85%, is widely expected when the Reserve Bank of Australia (RBA) announces its monetary policy decision on Tuesday. An increase in line with expectations would mark the fifth interest rate rise of 2026, taking the OCR to an 18-year high.

At 03:30 GMT, the bank will publish its decision alongside the Monetary Policy Statement. RBA Governor Michele Bullock will then hold a press conference at 04:30 GMT.

The Australian Dollar (AUD) is finding it difficult to hold 0.7000 against the US Dollar (USD) as the announcement approaches.

Inflation keeps pressure on the RBA

Australia’s annual inflation rate reached 3.9% in Q3, according to the latest available figures, remaining well above the central bank’s 2–3% target despite four rate increases already delivered. Persistent price pressures have driven monetary tightening in 2026, including in Australia, where the RBA first raised the OCR in February, before the Middle East war affected global energy prices. Meanwhile, the bank’s preferred inflation measure, the core Trimmed Mean Consumer Price Index (CPI), rose by 3.7% year-on-year, accelerating from 3.6% in Q2.

During a recent appearance before Parliament, RBA Governor Bullock observed that “Some of the international and domestic upside risks to inflation have materialized or are materializing.”

Bullock went on to say: “It’s important for the economy that inflation does not diverge from the target for too long,” adding, “since that risks it becoming embedded in inflation expectations, which feeds through to price and wage setting decisions.”

Elevated inflation and Bullock’s remarks make a strong case for a rate increase at the Board’s meeting. With that outcome already priced in, however, attention will turn to her press conference for indications of the next steps in monetary policy. The Governor is likely to maintain a hawkish stance and keep further increases on the table, lifting AUD.

AUD/USD awaits the Reserve Bank of Australia’s policy signals

A 25 bps increase as expected would probably offer the Australian Dollar near-term support. The extent of any gains, however, will hinge on the hawkishness of the accompanying statement and Governor Bullock’s remarks. With risk appetite improving ahead of the announcement and the US Dollar weakening, a larger-than-expected increase could prompt a near-term AUD rally. Leaving rates unchanged remains unlikely, but would send the currency sharply lower.

On the technical outlook, FXStreet Chief Analyst Valeria Bednarik says: “From a technical point of view, the AUD/USD pair is at risk of falling. On the daily chart, the pair found resistance at the start of the week around a flat 100-day Simple Moving Average (SMA) at 0.7030, the immediate resistance level. Last week’s peak at 0.7067 comes next, with the 200-day SMA a handful of pips below the level and also attracting sellers. The same chart shows technical indicators turning south, although holding above their midlines, reflecting the ongoing weakness but falling short of anticipating a steeper decline ahead.”

Turning to the key price levels, Bednarik says: “A slide below 0.6990 will likely trigger additional slides as buyers will be more keen to give up. The slide, then, could extend towards the 0.6640 region. On the contrary, steady gains beyond 0.7070 could end with the pair re-conquering the 0.7100 mark.”