The Reserve Bank of Australia has raised its cash rate target by 25 basis points to 4.60 per cent, the fourth increase of 2026. In its media release of 29 September 2026, the Monetary Policy Board said: "At its meeting today, the Board decided to increase the cash rate target by 25 basis points to 4.60 per cent."
The Board was not divided. "Today's policy decision was unanimous," the statement said.
Setting out its reasoning, the Board pointed to a combination of external and domestic pressures. "Inflation remains elevated and some of the upside risks flagged in August are materialising. The conflict in the Middle East has broadened and global energy prices are now much higher than had been assumed in the August forecasts. AI-related demand is driving rapid growth in global prices for technology-related goods. And there remains pressure on domestic capacity."
The Bank was careful to note that the same forces have not been uniformly negative for Australia. "To date, however, growth in Australia's major trading partners has been stronger than expected, as the boost from AI-related investment has outweighed the adverse effects of the Middle East conflict," the statement said. On the transmission of policy so far, the Board observed that "The three increases in the cash rate target since the beginning of the year have tightened financial conditions and the economy appears to be slowing." That sentence refers to the moves that preceded this one.
Those earlier steps came on 3 February, taking the target to 3.85 per cent; on 17 March, to 4.10 per cent; and on 5 May, to 4.35 per cent, each a 25 basis point move. The Board held at 4.35 per cent on 16 June before moving again on 29 September.
For corporate Australia the immediate consequence is arithmetic. A cumulative 100 basis points of tightening in 2026 now sits on top of every floating-rate facility, working capital line and rate-linked lease liability. The more consequential signal, in this publication's reading, is the Board's explicit naming of AI-related demand as a source of global goods price growth. Central banks have more often treated technology as a disinflationary force. A statement that places it among the pressures pushing prices up, alongside Middle East energy costs and domestic capacity constraints, is worth attention from anyone modelling input costs on hardware, data centre capacity, cloud contracts or electronics-heavy bills of materials. The Bank did not quantify the effect, did not name a sector or a company, and did not describe AI as the principal driver; it is one named factor among several.
Treasury teams carrying 2027 and 2028 maturities should model refinancing against a rate that has moved four times this year rather than against the flat path many first-quarter budgets assumed. Boards signing off 2027 plans this quarter should require at least one scenario in which the rate does not fall, because a unanimous vote combined with a reference to upside risks "materialising" argues against treating 4.60 per cent as the peak; that is an inference from the wording, not a forecast the Bank has issued. Capital committees should separately test whether technology capital expenditure has been budgeted at last year's prices, which the Board has now flagged as a rising cost. Exporters, by contrast, have something to work with: the Board's judgement that trading partner growth has been stronger than expected supports external volumes even as domestic demand cools. The test ahead is whether inflation and capacity data confirm the slowdown the Bank says is visible, or whether the upside risks it flagged continue to build.
