Will the RBA raise its interest rate to 4.85% as expected?

• November is set to bring an interest rate increase to 4.85% from the Reserve Bank of Australia.
• Upside risks to inflation have materialised, RBA Governor Michele Bullock has noted.
• Improved market sentiment has failed to lift the Australian Dollar, which remains weak before the decision.

Markets are widely anticipating another rate increase from the Reserve Bank of Australia (RBA) when it announces Tuesday’s monetary policy decision. The Official Cash Rate (OCR) is expected to rise by 25 basis points (bps), from 4.6% to 4.85%. An increase in line with expectations would mark the fifth interest rate hike of 2026, taking the OCR to an 18-year high.

At 03:30 GMT, the rate decision and Monetary Policy Statement will be released together. RBA Governor Michele Bullock will then hold a press conference at 04:30 GMT.

With the decision approaching, the Australian Dollar (AUD) is finding it difficult to hold the 0.7000 level against the US Dollar (USD).

Why does inflation remain the central concern?

Persistent price pressures have driven interest rate increases in 2026, including in Australia. The RBA’s first OCR increase came in February, even before the Middle East war affected global energy prices. Despite the four increases already noted, the latest available figures put Australia’s annual inflation at 3.9% in Q3, substantially above the central bank’s 2–3% target. Meanwhile, its preferred measure, the core Trimmed Mean Consumer Price Index (CPI), rose 3.7% year-on-year, accelerating from 3.6% in Q2.

During a recent appearance before Parliament, RBA Governor Bullock observed: “Some of the international and domestic upside risks to inflation have materialized or are materializing.”

Bullock also cautioned: “It’s important for the economy that inflation does not diverge from the target for too long,” adding, “since that risks it becoming embedded in inflation expectations, which feeds through to price and wage setting decisions.”

Taken together, elevated inflation and Bullock’s remarks make a strong case for an interest rate increase at the Board’s meeting. Since markets have already priced in a hike, attention will turn to the Governor’s press conference for clues about the subsequent policy path. Bullock is likely to maintain a hawkish stance and keep further increases on the table, lifting the AUD.

Can the Reserve Bank of Australia’s decision lift AUD/USD?

Near-term support for the Aussie is likely if the RBA raises rates by the expected 25 bps. The extent of any advance, however, will hinge on the hawkishness of the statement and Governor Bullock’s comments. With risk appetite improving ahead of the announcement and the US Dollar weakening, a larger-than-expected increase could spark a near-term AUD rally. Leaving rates unchanged remains unlikely, but such an outcome would send the AUD sharply lower.

FXStreet Chief Analyst Valeria Bednarik offers this assessment: “From a technical point of view, the AUD/USD pair is at risk of falling. On the daily chart, the pair found resistance at the start of the week around a flat 100-day Simple Moving Average (SMA) at 0.7030, the immediate resistance level. Last week’s peak at 0.7067 comes next, with the 200-day SMA a handful of pips below the level and also attracting sellers. The same chart shows technical indicators turning south, although holding above their midlines, reflecting the ongoing weakness but falling short of anticipating a steeper decline ahead.”

On the key price levels, Bednarik says: “A slide below 0.6990 will likely trigger additional slides as buyers will be more keen to give up. The slide, then, could extend towards the 0.6640 region. On the contrary, steady gains beyond 0.7070 could end with the pair re-conquering the 0.7100 mark.”