RBA rate increase expected; JPMorgan sees persistent hawkish bias

Given that an interest rate rise is virtually fully priced in, the Australian dollar and short-dated bond yields might face a bigger danger from an unforeseen hold than from the increase itself. The focus will likely move to the RBA's forward guidance and the updated projections in its quarterly Statement on Monetary Policy, which will reveal whether the board sees inflation returning to target without needing further tightening. An increase accompanied by a firmly hawkish tone could give support to the currency, whereas any acceptance that sluggish growth is shouldering more of the adjustment would indicate a peak is near. Elevated fuel and freight costs resulting from the Middle East conflict continue to pose an upward risk to the inflation picture the board must evaluate.

---

Earlier coverage:

• RBA tipped for fifth 2026 rate increase to 4.85% as lenders flag risk of further action in February
• ING raises Australian dollar target to 0.71, supports quarter-point RBA rate rise next week
• RBA set for back-to-back rate increases after hot CPI, says Natixis' Garcia Herrero

---

JPMorgan has aligned itself with those anticipating a rate increase from the RBA, wagering that a central bank still anxious about inflation will act again on Tuesday despite the economy showing signs of strain.

Key points:

• JPMorgan expects the RBA to lift its cash rate at this week's meeting
• That prediction is based on recent inflation figures and comments from senior RBA officials indicating that price rises remain unchecked
• Financial markets put the odds of another increase at about 90%
• JPMorgan believes that weak economic activity will restrict the scope for further rate rises after November, but it predicts the RBA will maintain a tightening stance as long as inflation remains high
• The rate announcement is due at 2:30pm Sydney time on Tuesday (0330 GMT, 2230 US Eastern on Monday)

The investment bank now forecasts that the Reserve Bank of Australia will increase borrowing costs once more this week, pointing to the latest price data and statements from senior RBA officials as evidence that the board's tightening cycle is unfinished.

Ben Jarman, JPMorgan's chief economist for Australia, said the RBA has repeatedly indicated that inflation is not yet under control and that it still has tasks to complete. Market pricing implies a roughly 90% probability of another increase in the official cash rate, leaving very little doubt about the likely outcome.

The rate decision is set for 2:30pm Sydney time on Tuesday (0330 GMT, 2230 US Eastern on Monday). It will be released together with the RBA's quarterly Statement on Monetary Policy and its refreshed projections for inflation, growth and employment. The cash rate currently stands at 4.60% after a quarter-point increase in September; a further move of that size would take it to 4.85%.

JPMorgan expects the environment to become less favourable for further tightening after this meeting. The bank said weak activity data reduce the probability of additional hikes beyond November, but it believes the RBA will keep a tightening bias because inflation remains elevated.

That tension was evident in Australian statistics issued earlier on Monday. The S&P Global manufacturing survey showed factory output contracting for a second month, with new orders falling at the fastest pace since late 2024, partly due to higher interest rates. The same survey revealed input costs rising at the quickest rate since June and manufacturers raising selling prices more rapidly.

For investors, the key question on Tuesday may be less whether the RBA hikes than how it frames the outlook. Guidance that leaves the door open to further increases would support JPMorgan's view of a persistent hawkish bias, while a stronger focus on slowing growth would indicate the cycle is approaching its peak.

---

The RBA rate increase is expected to be announced at 0330 GMT on Tuesday, November 3, 2026, which corresponds to 2230 US Eastern time on Monday, November 2, 2026.