Finance

Another rate rise: the highest in 15 years, and more may come

The RBA lifted the cash rate to 4.60 per cent, adding about $427 a month to the average mortgage, and says it will go again if inflation stays elevated.

Reserve Bank of Australia governor Michele Bullock at the bank's Martin Place headquarters

Reserve Bank governor Michele Bullock. Photo: Reserve Bank of Australia

By Editor · 29 September 2026

By Vikram Singh · 2026-09-29

TLDR

The Reserve Bank lifted the cash rate 25 basis points to 4.60 per cent on 29 September, the fourth increase this year and the highest level in roughly 15 years. Borrowers on the average $736,000 mortgage will pay about $427 more each month from 30 September.

KEY TAKEAWAYS

01The cash rate now sits at 4.60 per cent, the highest in approximately 15 years.

02About $427 a month more falls on the average $736,000 mortgage from 30 September.

03Broadening Middle East conflict and AI-driven goods prices were cited as new inflation risks.

04Markets and all major banks had priced in the 25-basis-point move before Tuesday.

05Governor Michele Bullock holds a press conference at 3.30 pm AEST to take questions.

Fourth rise of the year lands hardest on variable borrowers

The Reserve Bank Board raised the cash rate by 25 basis points to 4.60 per cent at its meeting on 29 September 2026, the fourth increase of the year and the highest the rate has sat in roughly 15 years.^[1] Previous increases fell on 4 February, 17 March and 5 May.^[2]

The average home loan size was $736,000 in the December quarter of 2025, and the 25-basis-point move adds roughly $427 a month to repayments on that loan from 30 September.^[5]

Board points to energy prices, AI goods and Middle East conflict

The Board's statement named three forces pushing inflation above its August forecasts. The Monetary Policy Board said inflation remains elevated and some of the upside risks flagged in August are materialising. It said the conflict in the Middle East had broadened and global energy prices were now much higher than assumed in the August forecasts. AI-related demand was driving rapid growth in global prices for technology-related goods, and pressure on domestic capacity remained.^[1]

On the question of further tightening, the Board left the door open plainly. "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," the statement said.^[1]

Governor Michele Bullock is scheduled to face questions at a press conference at 3.30 pm AEST.^[3] Bullock's briefing will be the first opportunity to gauge how far the Board's modelling extends into 2027.

This article contains analysis and commentary on market conditions. It does not constitute financial, investment, or professional advice. Past performance is not indicative of future results. Always consult a qualified adviser before making financial decisions.

SOURCES & CITATIONS

FREQUENTLY ASKED QUESTIONS

What is the cash rate now?

The Reserve Bank cash rate is 4.60 per cent following the 29 September 2026 decision, the highest level in approximately 15 years.

How much more will I pay on my mortgage?

On the average outstanding home loan of $736,000, the 25-basis-point rise adds about $427 a month to repayments from 30 September.

Will rates rise again?

The Board said it will increase the cash rate further if needed to return inflation to target. No specific date or size for a future move was announced.

Vikram Singh

Vikram Singh writes about banking. He follows where money actually moves, from the strategy set in head office to what changes on a customer's phone.

Important

This is general information only and does not constitute financial advice. Please consult with a licensed financial adviser before making any investment decisions.