For the Australian dollar, the hike delivers little that was not already priced. Markets had assigned an 85% chance to the move, and around one and a half increases by mid-2027 were priced before the meeting. The three-member dissent and the absence of an explicit tightening bias argue against a sustained AUD rally, and leave room for a modest fade if Governor Michele Bullock’s press conference leans cautious. The front end of the curve is likely to stay supported by the higher inflation forecasts, keeping a further hike in play but not locked in. In equities, the RBA’s own assessment that higher rates and the housing downturn are weighing on banks, consumer discretionary and real estate stocks points to continued pressure on those sectors. Energy names remain supported by oil prices the bank assumes will stay well above pre-conflict levels.-The RBA hiked again as its inflation forecasts jumped, but a three-member dissent and a non-committal outlook suggest the board is closer to the top of the cycle than its forecasts alone imply.Summary:The RBA raised its cash rate by 25 basis points to 4.85%, its fifth increase this year and the highest since 2008; six members voted for the hike and three to holdHeadline inflation is forecast to peak at 4.5% in the December quarter, with headline and trimmed mean inflation above 3% until late 2027, about three quarters longer than forecast in AugustThe upgrade reflects higher fuel prices linked to the Middle East conflict and a judgement that domestic capacity pressures are tighter than thought; the RBA raised its estimate of the NAIRU to around 4.75%Unemployment averaged 4.6% in the September quarter and is forecast to reach 5.1% by end-2028, while house prices are almost 5% below their March peakThe forecasts assume the cash rate rises by around 35 basis points by mid-2027 based on market pricing, up to 50 basis points higher than assumed in AugustThe board said it will be attentive to the data and stopped short of signalling further hikesThe Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85% on Tuesday, its fifth increase this year and the highest level since 2008. A three-member dissent, however, signalled growing division over how much further policy needs to tighten.Six members of the Monetary Policy Board voted for the hike, while three preferred to keep the rate at 4.60%. In its statement, the board said inflation remains elevated and broadly based, and that there is an increasing risk higher inflation expectations will become embedded. It judged that further tightening in financial conditions was warranted to support the return of inflation to target.The accompanying Statement on Monetary Policy showed a material upgrade to the inflation outlook. Headline inflation is now forecast to peak at 4.5% in the December quarter, and both headline and trimmed mean inflation are expected to stay above 3% until late 2027, about three quarters longer than forecast in August. Inflation is not expected to return to the 2.5% midpoint of the target band until mid-2028. Headline inflation was 3.9% over the year to the September quarter, with trimmed mean at 3.7%.The RBA attributed the revision to two factors. Fuel and other commodity prices have risen sharply since the Middle East conflict re-escalated, with Brent crude around US$115 a barrel at the time of the forecasts. Staff also now judge domestic capacity pressures to be tighter than previously thought, and lifted their estimate of the unemployment rate consistent with stable inflation to around 4.75%. The bank also noted that AI-related demand is pushing up prices for technology goods, and that some measures of inflation expectations have risen.The economy is slowing under the weight of higher rates. House prices were almost 5% below their March peak in September, unemployment averaged 4.6% in the September quarter, and the jobless rate is forecast to rise to 5.1% by end-2028. Strong investment in data centres is partly offsetting weaker household spending and housing activity.The forecasts assume the cash rate rises by around 35 basis points by mid-2027 in line with market pricing, a path up to 50 basis points higher than in August. On guidance, though, the board said only that it will be attentive to the data and will do what is necessary to bring inflation back to target. That stops short of an explicit commitment to further hikes.The outcome matched expectations from HSBC and AMP, while the split vote and cautious guidance sit closer to AMP’s hike-and-hold view than to ANZ’s warning of a move to 5.10%. Background:RBA set for fifth hike of 2026 to 4.85%: three views on what comes nextDeutsche Bank stands alone with RBA hold call as 31 of 32 economists tip a hikeJPMorgan joins hike call for RBA’s November meeting, sees tightening bias persistingRBA set for fifth 2026 hike to 4.85% as banks flag risk of another move in FebruaryING lifts AUD/USD target to 0.71 as it backs a 25bp RBA hike next weekRBA set for back-to-back hike after hot CPI, says Natixis’ Garcia Herrero This article was written by Eamonn Sheridan at investinglive.com.