25-Basis Point Interest Rate Hikes in Australia and Armenia
November 3, 2026
The Reserve Bank of Australia‘s official cash rate hike of 25 basis points to 4.85% is the fifth such increase since this year’s first policy review in February, and the new rate level is at its highest level since the first week of December 2008. CPI inflation pringed at a 6-month high in September, well above the 2-3% target range. Some of the trappings of today’s widely anticipated action, detracted from its immediate market reception. Number one, three dissenting votes that favored leaving the OCR at 4.60% were cast in the 9-3 decision; the identities of that minority was not revealed. Number two, the bank’s monetary statement today does not explicitly contain forward guidance indicating likely additional rate increases.
Underlying inflation remains broadly based. Capacity pressures appear a little tighter than previously estimated and there are indications that higher fuel prices are being passed through to prices of other goods and services. Inflation is now expected to remain above 3 per cent for the coming year and there is an increasing risk that higher inflation expectations will become embedded.Given the revised inflation outlook and the continuing upside risks, the Board judged that a further tightening in financial conditions is warranted to support the return of inflation to target. The Board will continue to do what it considers necessary to bring inflation sustainably back to target.
After today’s announced 25-basis point increase, the Central Bank of Armenia‘s repo rate will be at a 22-month high of 7.0%. A previous 25-bp hike in September ended an 11-month interval when the rate stayed at 6.5%. In taking today’s step, a statement opines that “the risks that central banks in major economies may raise policy rates further or keep them at elevated levels for an extended period have become more tangible.” Two other forces behind today’s action include a rising trend in rate-neutral central bank rates and persistent regional conflicts. Armenian consumer price inflation has ranged between 4.2% and 5.1% every month since March versus a medium-term target of 3.0%.
Copyright 2026, Larry Greenberg. All rights reserved.
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