RBA rate forecast: what the market expects in October 2026

At 11.30 this morning the consumer price index came in at 4.3 per cent for the year to September, up from 4.0 per cent in August. CBA and NAB have both dropped their calls for a hold next week. All four major banks now expect the cash rate to go to 4.85 per cent on Tuesday.

The quarter itself was close to script. The CPI rose 1.3 per cent over the three months, and the trimmed mean, the measure the Reserve Bank leans on hardest, rose 1.0 per cent. The Reserve Bank had forecast 0.8 in August.

The year-ended numbers read worse. Headline inflation at 4.3 per cent is 0.4 points above every one of those forecasts. Underlying inflation at 3.6 per cent is up from 3.5 in August, but only because August was revised. That figure was published at 3.6 last month and cut to 3.5 this morning, so on the numbers as first published underlying inflation has not moved in a year.

The money moved anyway. Bloomberg's overnight index swaps had the chance of a November hike at about 60 per cent before the release and 79 per cent at 11.47am, as the ABC reported. The ASX rate tracker, which updates at the close, has 62 per cent on Monday and 60 per cent on Tuesday, its last reading before the print.

Andrew Hauser, appearing at Senate estimates as the data landed, called inflation "broadly in line with the central bank's expectations, but was too high". That is the argument for Tuesday in one sentence. Three of the four banks had the trimmed mean right. The forecast that missed was the Reserve Bank's own.

CBA's Belinda Allen called the coming rise "an insurance hike to protect against these forces", pointing to energy prices and the investment boom in AI infrastructure. "Acting early and acting decisively should manage the risk of inflation being higher for even longer," she wrote. CBA, NAB and Westpac all expect a pause in December, according to Savings.com.au, with Westpac putting the next risk in February.

On our board, Greater Bank's Great Rate Home Loan still has the lowest variable comparison rate at 6.10% (6.09% advertised), ahead of Up at 6.20%. The September rise has reached all 30 of our lenders with a reading from before that decision. The only move in the past week was IMB Bank, which added 0.05 points to its variable rates on 23 October.

If Tuesday delivers 0.25 points and your lender passes it on in full, a $600,000 loan over 30 years costs about $97 a month more. That is $3,632 at 6.09% against $3,730 at 6.34%, principal and interest.