Bendigo Bank November 2026 Economic Update

The RBA’s decision to increase the official cash rate for the fifth time this year, taking the rate to 4.85 per cent aligns with the Bank's expectations for rates to remain at this level into 2028 to deal with persistent inflation, although at a more aggressive pace than expected a month ago.

The split decision - six board members voted to increase rates while three voted to hold - highlights how complex the global backdrop and domestic conditions are, with the cash rate now up to its highest level since the GFC in 2008.

Bendigo Bank Chief Economist David Robertson said that the price of oil remains a key variable for inflation and by extension for interest rates. While it's fallen from the peak by more than 10 per cent, the price of diesel is still elevated which will take time to normalise.

"The RBA statement and updated forecasts appear slightly less aggressive and hawkish, and subject to ongoing data around jobs, inflation and spending my view is that rates will remain on hold going into 2027, and probably for most of next year," Mr Robertson said.

"The geopolitical tensions that have been the key driver of markets this year will evolve into the new year, but the second order impact of energy prices takes time to permeate consumer prices," he said.

"The tailwinds from AI investment continue to offset the headwinds from higher energy prices and resulting inflation but concerns around the payoff of massive AI capital raisings and capex spend have come to the fore. This dynamic will test the market's resolve."

Residential property prices continue to see a broadening of the decline to most capital cities and many regions, with capital city prices down more than seven and a half per cent.

"This decline appears likely to extend to around 10 to 12 per cent before a slow but steady recovery – the previous largest decline on record of around eight and a half per cent is expected to be broken in coming months," Mr Robertson said.

"Resilient labour markets and an ongoing lack of supply should limit the downside," he said.

"We also continue to see unemployment slightly higher than the RBA forecasts, but still only back up to levels seen in 2019. Economic growth will be slower, falling to only around one per cent, but we expect still just remaining positive in real terms," he said.

"Outperformance from major trading partners among the AI investment boom will help to soften the economic blow of adjusting to higher interest rates, maintaining business investment and demand to an extent."