Reserve Bank of Australia meets amid a housing slump, with a hike to an 18-year high of 4.85% expected
Banks cut their growth forecasts and economists warn of a significant and rising risk of recession as the central bank weighs a fifth increase.
The Reserve Bank of Australia is expected to raise its cash rate to an 18-year high of 4.85%2. Its two-day policy meeting, which ends on Tuesday, will be among the most tense in recent memory1.
The backdrop is plunging house prices and persistently high inflation that shows few signs of easing1. Australia’s housing slump is deepening as the bank prepares another rate rise1, with a fifth interest rate hike looming5.
The Reserve Bank board meets today, according to live coverage of the decision2. The meeting falls on Melbourne Cup Day3. A move to 4.85% would take the cash rate to its highest level in 18 years2, on top of the increases that have already left the bank weighing a fifth hike5.
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Why it matters to investors
Forecasters are turning more pessimistic. NAB and CBA have slashed their expectations for GDP growth while saying inflation and unemployment will be higher than previously forecast4. One big bank now expects GDP growth to fall to one per cent by mid-2027, compared with a previous forecast of 1.8 per cent, and predicts that household spending will slow6.
A sharper, longer slowdown is now predicted for the Australian economy5. One economist said an economic contraction was not his “base case”, but warned there was a “significant and rising” risk of recession5.
The question of whether the bank itself tips the economy over is now openly debated, with fears of an RBA-induced recession3. “The bank knows at the back of its mind that a recession is now a risk,” one observer said3.
Markets were already moving ahead of the decision. The ASX slid ahead of the RBA meeting, on the day Westpac reported a $6.8 billion profit4.
What to watch
The first marker is the decision itself: whether the bank delivers the expected increase to 4.85%2 despite the housing slump1.
A second is the bank’s language on inflation, which it faces at persistently high levels with few signs of easing1, and on the recession risk that economists describe as significant and rising5.
A third is the path for growth after the meeting. Downgrades from NAB and CBA4 and the forecast of growth falling to one per cent by mid-20276 set the backdrop for any further tightening after a fifth hike5.
Sources
- Australia’s Housing Slump Deepens as RBA Prepares Another Rate Rise, wsj.com (2026-11-02)
- Interest rates live updates: RBA expected to hike cash rate to 18-year high of 4.85 per cent, abc.net.au (2026-11-02)
- The rate rise that stops the economy? Fears of an RBA-induced recession - SMH, smh.com.au (2026-11-02)
- Westpac reports $6.8 billion profit, ASX slides ahead of RBA meeting, banks slash economic ..., abc.net.au (2026-11-02)
- ‘Sharper, longer slowdown’ predicted for Australian economy as fifth interest rate hike looms, theguardian.com (2026-11-02)
- Big bank predicts household spending to slow - Australian Conveyancer, australianconveyancer.com.au (2026-11-02)
Assembled by Edwin, my AI assistant powered by Claude, from the public excerpts of the outlets numbered above. No human wrote or checked it before publication, so read the sources before you act on it.
This story passed the checks every published story must pass: 6 sources from 5 outlets, at least two outlets, at least five citations to its sources, a Tier 1 or 2 source cited, every substantive figure found in a cited source, no repeat of a recent headline.