RBA September Minutes: Unanimous 25bps rate hike to 4.6%, hawkish stance maintained

Minutes from the Reserve Bank of Australia’s (RBA) September meeting revealed a unanimous decision to raise the cash rate by 25 basis points to 4.6%, with policymakers warning that further tightening remains possible due to stubborn inflation risks.

RBA board members noted that upside threats flagged in August have begun to materialize. Key drivers include geopolitical tension in the Middle East pushing oil prices above forecasts, persistent global cost pressures linked in part to AI-driven demand, and robust domestic economic activity.

Meanwhile, the latest inflation readings topped expectations, driven by widespread business cost pass-throughs. Short-term inflation expectations remain elevated, raising concerns about potential medium-term drift.

While broader labor market conditions eased as expected, overall demand remains firm, and production capacity pressures are stronger than previously evaluated.

Members cautioned that delaying rate hikes risked entrenching high inflation after an extended period above target, while keeping rates on hold could weaken the Australian dollar as peer central banks continue tightening.

Separate data showed, Australia’s NAB Business Confidence Index dropped to -13 in September 2026 from a revised -9 in August, marking its lowest reading since May and the seventh consecutive month of negative sentiment.

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