RBA Preview November: 25 bps hike expected as inflation outlook worsens

Markets priced a 78% probability of a 25-basis-point RBA hike on November 2, which Investing.com forecasts said would lift the benchmark rate to 4.85%; the article described it as the fifth hike of the year. September core inflation remained above the RBA’s 2% target, and ANZ analysts said the cash rate could reach 5.10% in December or February. Further hawkish signals could weigh on Australian stocks while supporting the Australian dollar; AUD/USD was up 5.4% so far in 2026.

Analysis

With a hike already substantially priced, the decision itself may offer limited direction; the market-moving variable is whether the statement and Governor Bullock’s guidance imply a higher terminal rate or a longer hold. A hawkish surprise would tighten financial conditions through both bond yields and the currency, pressuring long-duration equities, property and domestic-demand exposures. Banks are not a clean hedge: higher rates can support asset yields, but deposit repricing, weaker mortgage demand and rising arrears could erode that benefit over the next 6–18 months. A firmer AUD may also squeeze exporters’ translated earnings, while easing imported-cost pressure could eventually help consumer-facing firms.

The near-term risk is a “priced hike, sell-the-fact” move if guidance does not validate further tightening. Conversely, another inflation or wage surprise could revive expectations of additional hikes and extend pressure on rate-sensitive assets. The structural question is whether household and business credit stress rises before inflation cools; that would shift the relative winners away from lenders and toward cash-rich, lower-duration businesses. Verify the post-meeting statement, subsequent inflation and wage data, bank arrears disclosures, and AUD response before treating the move as a durable trend.

Key Decisions for Investors

• Avoid a directional ASX 200 trade based on the expected hike alone. Consider a short-duration or defined-risk downside position only if post-meeting guidance lifts the expected policy path; reduce or close it if yields fall back and the index holds its pre-decision range.
• For the next 1–3 months, prefer a conditional relative-value bias toward cash-generative, lower-duration equities over property and other rate-sensitive exposures if Australian yields rise further. The thesis is falsified by a clear decline in market-implied rates or a sustained rebound in those rate-sensitive sectors.
• Treat banks as a selective, not blanket, beneficiary: monitor deposit costs, mortgage arrears and credit-loss guidance. Avoid adding exposure solely on the basis of wider lending rates; rising arrears alongside margin pressure would invalidate the positive rate sensitivity.
• Watch AUD/USD after the statement rather than buying the currency pre-event. A hawkish repricing can support AUD, but a failure to make new highs despite higher local yields would signal that the move is priced or outweighed by external drivers.