RBA Set to Hike to 4.60%, Highest Cash Rate Since 2011

The Reserve Bank of Australia is expected to raise its cash rate by 25 basis points to 4.60% at its September 29 meeting, a Reuters poll published on Friday morning in Sydney found. Thirty-three of the 34 economists surveyed between September 17 and 24 expect the move, which would take the cash rate to its highest level since late 2011. A hike would be the RBA's fourth of 2026, bringing cumulative tightening this year to 100 basis points.

Context — Why the RBA Has Swung From Hold to Hike

The consensus has moved sharply in a matter of weeks. A month ago, nearly all economists expected the RBA to stay on hold in September, with median forecasts putting the peak cash rate at 4.35%. That view has been overtaken by firmer inflation readings since the August meeting.

The catalyst is core inflation, the RBA's preferred trimmed mean measure, which held at 3.6% in July. The bank's own forecast has that gauge easing to 3.3% by the end of the year, so the current reading sits three-tenths above the projected path.

Governor Michele Bullock has also cast doubt on whether policy is restrictive enough to return inflation to the 2% to 3% target band. Her comments, combined with the inflation prints, form the chain that pushed economists toward a hike call.

Growth adds to the case. The economy expanded a little faster last quarter than the roughly 2% pace the RBA estimates it can sustain without adding to price pressures, even as momentum faded.

HSBC chief economist for Australia and New Zealand Paul Bloxham, one of five respondents expecting another hike next quarter, said the RBA is growing impatient with above-target inflation. He argues the bank needs to show that returning inflation to target within its late-2027 horizon comes first. He cited growth that beat expectations, disappointing productivity and a July monthly inflation reading that ran too hot as reasons for switching to a September hike call.

The steepness of the swing matters for positioning. When nearly every forecaster shifts from hold to hike in a single month, the decision itself becomes the least informative part of the meeting.

Data — What the Poll Numbers Show

Metric	Current	Expected after September 29
Cash rate	4.35%	4.60%
2026 tightening	75 bps	100 bps
End-2026 median view	—	4.60% (26 of 31)
End-2027 median view	—	4.35%

The end-2026 forecasts cluster tightly. Twenty-six of the 31 respondents who answered that question see the cash rate still at 4.60% in December, framing Tuesday's move as the final increase of the cycle. A handful expect a further rise to 4.85% by year-end.

Among the major domestic banks, CBA, NAB and Westpac see the cash rate ending the year at 4.60%, while ANZ expects 4.85%. NAB said the risks are clearly skewed towards a follow-up move in November, though that is not its base case. All four major Australian banks now forecast a hike to 4.60% on September 29.

Beyond this year, the distribution widens sharply. Economists broadly expect the cash rate to hold at 4.60% through mid-2027, before views diverge from the third quarter. The median forecast has the rate back at 4.35% by the end of 2027, within a range running from 4.85% at the top to 4.10% or lower at the bottom.

That spread — 75 basis points between the highest and lowest end-2027 forecasts — is the clearest signal that the easing path is unresolved.

Analysis — What It Means for the Australian Dollar

With 33 of 34 economists positioned for a hike, Tuesday's move is close to fully priced. The Australian dollar is therefore more likely to react to the RBA's statement and Governor Bullock's press conference than to the decision itself.

If the bank signals it is open to hiking again, AUD could get a boost and front-end yields could rise, as markets price in a November move. A clear "one and done" message could instead take some of the tightening premium out of the currency.

The rate differential is the second-order story. Australia's policy rate would rise further above most of its G10 peers, which supports AUD on the crosses, especially AUD/JPY and AUD/NZD. Those pairs carry the cleanest read because neither counterpart central bank is tightening at the same pace.

The counter-argument sits in the labour market. Australia's jobless rate rose to 4.6%, its highest since 2021, with participation outpacing the jobs beat. A softening labour market is the standard reason a central bank stops hiking, and it is the strongest case for the minority expecting 4.60% to mark the peak.

Positioning reflects the split. The flow into AUD has been built on the expectation of a hike that is already consensus, which limits the upside from the decision alone. The marginal dollar now trades the statement language, not the number.

Outlook — What to Watch Next

The September 29 decision and the accompanying statement are the first catalysts. Markets will parse the language for whether 4.60% is treated as a peak or a waypoint.

Governor Bullock's press conference follows the statement and carries similar weight, given her prior doubts about how restrictive policy is. Any shift in that framing moves front-end yields.

After that, the November meeting becomes the live question. NAB flags the risks as skewed towards a follow-up move, and five respondents expect another hike next quarter. Whether markets price a November move depends on the next inflation prints and the labour data.

The end-2027 forecast range, from 4.85% to 4.10% or lower, is the level map for the easing debate. A median of 4.35% by end-2027 implies roughly 25 basis points of cuts from 4.60%, but the dispersion means no single path is priced with confidence.

Frequently Asked Questions

What does an RBA hike to 4.60% mean for the Australian dollar?

The decision itself is close to fully priced, with 33 of 34 economists expecting it, so AUD is unlikely to move much on the number alone. The reaction depends on whether the RBA signals more tightening ahead. An open-ended stance supports AUD and front-end yields; a clear end-of-cycle message removes some tightening premium from the currency.

Why did economists switch from expecting a hold to expecting a hike?

Core inflation held at 3.6% in July against the RBA's end-year forecast of 3.3%, and Governor Bullock questioned whether policy was restrictive enough. Growth also ran slightly above the roughly 2% pace the RBA sees as sustainable. Those three factors, plus a hot July monthly inflation reading, moved the consensus within a month.

Where do forecasters see the cash rate at the end of 2027?

The median forecast is 4.35%, implying modest easing from 4.60%. The range is wide, running from 4.85% at the top to 4.10% or lower at the bottom. Views stay clustered near 4.60% through mid-2027 before diverging sharply from the third quarter of that year.

Bottom Line

The RBA's decision is priced; the statement's tone on further tightening is what moves AUD and front-end yields.