With a hike almost fully priced, the bigger risk for the Australian dollar and short-dated bond yields may be a surprise hold rather than the move itself. Attention is likely to shift to the RBA’s guidance and the refreshed forecasts in its quarterly Statement on Monetary Policy, which will show whether the board sees inflation returning to target without further tightening. A hike paired with a clearly hawkish bias could support the currency, while any acknowledgement that weaker growth is doing more of the work would point to a peak. Higher fuel and shipping costs linked to the Middle East war remain an upside risk to the inflation outlook the board has to weigh.
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Earlier:
RBA set for fifth 2026 hike to 4.85% as banks flag risk of another move in February
ING lifts AUD/USD target to 0.71 as it backs a 25bp RBA hike next week
RBA set for back-to-back hike after hot CPI, says Natixis’ Garcia Herrero
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JPMorgan has joined the RBA hike camp, betting that a central bank still worried about inflation will move again on Tuesday, even as the economy shows signs of strain.
Summary:
JPMorgan now expects the Reserve Bank of Australia to raise its cash rate at this week’s meeting
The call reflects recent inflation data and comments from senior RBA officials signalling inflation is not yet under control
Markets price roughly a 90% probability of another increase
JPMorgan sees weak activity limiting the scope for hikes after November, but expects the RBA to keep a tightening bias while inflation stays high
The decision is due at 2:30pm Sydney time on Tuesday (0330 GMT, 2230 US Eastern on Monday)
JPMorgan now expects the Reserve Bank of Australia to raise interest rates again this week, pointing to recent inflation data and comments from senior central bank officials as evidence that the board’s tightening cycle is not yet complete.
Ben Jarman, JPMorgan’s chief economist for Australia, said the RBA has consistently signalled that inflation is not yet under control and that it still has work to do. Market pricing puts the probability of a further increase in the official cash rate at about 90%, leaving little doubt about the expected outcome.
The decision is due at 2:30pm Sydney time on Tuesday, which is 0330 GMT and 2230 US Eastern on Monday. It will be released alongside the RBA’s quarterly Statement on Monetary Policy and its updated forecasts for inflation, growth and unemployment. The cash rate currently stands at 4.60% after a quarter-point increase in September, so a further move of that size would take it to 4.85%.
JPMorgan expects the backdrop to become less supportive of further tightening after this meeting. The bank said weak activity data reduce the likelihood of additional hikes beyond November, but it expects the RBA to keep a tightening bias because inflation remains too high.
That tension was visible in Australian data released earlier on Monday. The S&P Global manufacturing survey showed factory activity contracting for a second month, with new orders falling at the fastest pace since late 2024, partly because of higher interest rates. The same survey showed input costs rising at the fastest rate since June and manufacturers raising selling prices more quickly.
For markets, the key question on Tuesday may be less whether the RBA hikes than how it frames the outlook. Guidance that keeps further increases on the table would support JPMorgan’s view of a persistent hawkish bias, while greater emphasis on slowing growth would suggest the cycle is nearing its peak.
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RBA rate hike expected to be announced at 0330 GMT Tuesday, November 3, 2026 / 2230 US Eastern time Monday, November 2, 2026
This article was written by Eamonn Sheridan at investinglive.com.
