The rate rise that stops the nation, but interest rates can't win the inflation race alone
CPA Australia
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3 November 2026
The rate rise that stops the nation, but interest rates can’t win the inflation race alone
Australia’s largest accounting body, CPA Australia, says another interest rate rise has sent an unmistakable message to households, businesses and governments: inflation remains stubbornly high, economic pressures persist and interest rates alone cannot fix Australia’s economic challenges.
The Reserve Bank of Australia lifted the cash rate by 25 basis points to 4.85 per cent, noting that inflation remains too high and warning that it is expected to stay elevated through much of 2027, later than previously forecast.
With the Melbourne Cup stopping the nation for a few minutes, CPA Australia Business Investment Lead Gavan Ord said this latest rate increase would “slow the economy for some time”.
“Today might be the race that stops the nation, but this rate rise will certainly make households and businesses stop and take notice,” Mr Ord said.
“The message could not be clearer. Inflation remains stubbornly high and the economic pressure facing households and businesses is not going away.
“For mortgage holders and small businesses hoping for some relief, the prospect of lower borrowing costs has been pushed further into the distance.
“Borrowers who hoped September’s increase might have been enough to tame inflation will be bitterly disappointed. Businesses considering investment, hiring and growth now face a longer period of uncertainty, weaker consumer demand and higher financing costs.”
Mr Ord said the factors driving today’s rate increase reinforce the need for governments to tackle the structural challenges facing Australia’s economy, particularly weak productivity, unnecessary regulation, elevated government spending and barriers to business investment.
“While the Reserve Bank has a job to do, monetary policy cannot solve Australia's economic challenges on its own. Governments must also pull the levers available to them. That means genuine productivity-enhancing reform, removing unnecessary red tape, exercising spending discipline and creating the conditions for businesses to invest, innovate and grow.”
“Business owners and investors value certainty. When borrowing and operating costs are both rising, businesses understandably become more cautious about investing, hiring and expanding.”
Mr Ord said households and businesses should not assume this will be the final increase.
“There is no guarantee this is the last rate rise. Businesses and households need to prepare for the possibility that borrowing costs remain higher for longer, or rise further if inflation does not ease.
“For businesses, that means stress-testing cash flow, reviewing financing arrangements and carefully considering investment plans.
“Those under financial pressure should seek professional advice early. Accountants can play an important role in helping businesses manage risk, preserve cash flow and make informed decisions in an increasingly difficult environment.”
About us:
About CPA Australia
CPA Australia is Australia’s leading professional accounting body and one of the largest in the world. We have more than 176,000 members in over 100 countries and regions. Our core services include education, training, technical support and advocacy. CPA Australia provides thought leadership on local, national and international issues affecting the accounting profession and public interest. We engage with governments, regulators and industries to advocate policies that stimulate sustainable economic growth and have positive business and public outcomes. A CPA is a Certified Practising Accountant. More at cpaaustralia.com.au
Contact details:
Adrienne Biscontin, External Affairs, CPA Australia [email protected] or 0429 009 691
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Gavan Ord, Business and Investment Lead, CPA Australia.
