Will the RBA Raise Rates Again? The September Quarter CPI Will Decide
The RBA lifted the cash rate to 4.60% at its September meeting — a fourth increase for 2026 and the highest level since 2011. The question now dominating trading desks and mortgage calculators alike is simple: is the board finished, or is one more hike still coming? The honest answer is that it hinges almost entirely on a single upcoming data release.
Markets have trimmed their hike bets — for now
After a softer-than-feared August monthly CPI indicator, futures markets pared back the probability of another near-term move. The read suggested some of the heat may be coming out of inflation, and traders responded by nudging the odds of a November hike lower. On the surface, that looks like the beginning of a plateau at 4.60%.
But a single monthly print rarely settles the debate — and the underlying picture is far from benign.
The upside risks haven't gone away
Three forces are keeping a further hike firmly on the table:
- Elevated oil prices. A sustained rise in crude feeds straight into petrol and transport costs, lifting headline inflation — and, if it persists, bleeding into broader price expectations.
- Booming AI investment. A wave of AI-related capital spending is adding real demand to an economy the RBA is actively trying to cool: more investment, more hiring, more pressure on capacity.
- Sticky domestic pressures. Services inflation — rents, insurance, labour-intensive services — remains the hardest component to shift, and it is largely domestically generated. This is exactly the kind of inflation the RBA worries about most.
Each of these works against the disinflation story that the August print briefly hinted at.
Why the September quarter CPI is the swing factor
Here is the crux. The September quarter CPI — and specifically the trimmed mean, the RBA's preferred gauge of underlying inflation — is the last major inflation read before the November board meeting.
- The board will struggle to justify waiting
- An upside surprise would likely force its hand into another 25bp hike as soon as November
- Holding and hoping would risk letting inflation expectations drift
- The RBA can comfortably hold at 4.60%
- Any further decision is pushed out to December or February
- The board buys time to assess oil, the AUD and domestic demand
In other words, November is live — but the real trigger isn't the meeting itself, it's the CPI print that precedes it. A hot trimmed mean turns a likely hold into a probable hike; an in-line number likely parks the cash rate at 4.60% into the new year.
What to watch
- The September quarter CPI release — above all, the trimmed mean versus consensus.
- The 3 November RBA board meeting and the accompanying statement.
- Oil prices and the Australian dollar, which can amplify or offset the domestic inflation story.