At a glance
– The Reserve Bank of Australia raised its cash rate target by 25 basis points to 4.85% on 3 Nov. Six members voted for the rise and three voted to hold at 4.60%.
– Its staff now expect inflation to stay above 3% for the coming year and to reach the top of the 2-3% target band only in late 2027, about three quarters later than they forecast before.
What the RBA decided
The decision came out at about 03:30 UTC (04:30 CET). The board’s statement says the inflation outlook has been “revised materially higher”, partly because of fuel and other commodity prices tied to the conflict in the Middle East, and partly because the economy is running a little hotter than the bank had thought.
It also notes that AI-related investment is driving rapid growth in the prices of technology goods. That is a phrase I did not expect to read in a rate statement this year, and I suspect it will not be the last time.
The vote is the news. In September the board raised to 4.60% unanimously. This time a third of it wanted to stop.
Why three said hold
The statement gives their case without naming it. The economy is slowing, housing prices “have fallen significantly” and the unemployment rate has risen, the board says, and it expects unemployment to rise further than it projected in August.
The majority answered with the inflation numbers. Here is how the target date has moved, in the bank’s own words:
- Top of the 2-3% band: late 2027, around three quarters later than previously forecast.
- Coming year: inflation “above 3 per cent”.
- The worry: “an increasing risk that higher inflation expectations will become embedded.”
Six members judged that risk worth another quarter point. Three judged that falling house prices and rising unemployment would do the work on their own.
My base case: the reluctant majority
I will call it the reluctant majority.
A board that hikes with three members against is not on a pre-set path. It is buying insurance against inflation expectations, and paying for it with a weaker housing market. More likely than not, the next step depends on the data rather than on a plan, which is also what the statement says.
For bitcoin, the channel is the currency, and it is a thin one. Our guide on how bond yields affect bitcoin explains why rates matter through the dollar and global liquidity rather than through Australia directly.
The currency treated it as a soft hike. On Kraken, the Australian dollar fell from $0.6996 to $0.6979 in the 03:30 UTC quarter-hour and was about $0.6977 by 05:00 UTC. A currency that falls on a rate rise usually means traders read the decision as softer than feared. The split vote is the obvious candidate.
Bitcoin barely moved.
It went from $76,697 to $76,628 in the same quarter-hour, then back to $76,804 in the next, Kraken data show, and in Australian dollars it was about A$110,080 by 05:00 UTC.
With Binance’s second withdrawal batch rolling out at the same time, there was no shortage of other things to trade.
The RBA joins a busy run of central banks. Last week the ECB held at 2.5% and the Bank of Japan held at 1.25%, and this week’s calendar still has the Bank of England and US payrolls to come.
What would change my mind
Two things. If the minutes, due in two weeks, show the three holdouts arguing that the board has already done too much, the reluctant majority becomes a board close to pausing, and the Aussie could weaken further.
Second, if the next inflation figures beat the new forecasts, the six win the argument and the split narrows. Neither outcome would move bitcoin much on its own; the dollar and US yields still matter far more.
The bottom line: The RBA hiked, but a 6-3 vote and a softer currency suggest the market sees less appetite for more, even as the bank pushes its inflation goal back to late 2027.
— Alasdair
Data: Reserve Bank of Australia media releases 2026-30 (3 Nov) and 2026-27 (29 Sep); Kraken AUD/USD, XBT/USD and XBT/AUD 15-minute candles, 02:45–05:00 UTC, 3 Nov 2026. Not financial advice.
This article is for information only and is not investment advice.