The latest inflation numbers have landed, and they have changed the mood in the market. With the RBA board meeting on Tuesday 3 November 2026, the question for most of our clients is no longer whether rates might rise, but how much a further rise would matter to their business and what they can sensibly do about it now. Below we unpack what the data says, what it means for lending, and the decisions we think are worth making this week rather than next quarter.
What the September quarter numbers told us
Core inflation rose 1.0 per cent over the September quarter, in line with expectations. The annual trimmed mean now sits at 3.7 per cent and headline inflation at 3.9 per cent (ABS, September quarter 2026). That is the fifth consecutive quarter in which core inflation has printed between 0.8 and 1.0 per cent, and the six-month pace has lifted to roughly 3.7 per cent annualised from about 3.4 per cent in the first half of the year. The monthly September reading was firmer again, with annual headline inflation at 4.3 per cent and core at 3.6 per cent (ABS, September 2026).
What matters to us is not any single figure but the pattern. Inflation is not drifting back towards the target band, it is settling above it, and that is the kind of persistence that central banks respond to.
Why this is not just a fuel and power story
It is tempting to blame the headline on energy, fares and other items that governments have been pushing and pulling through subsidies and rebates. The numbers do not support that comfort. Around 60 per cent of CPI categories rose faster than 3 per cent a year in the quarter, the widest spread in more than three years. Strip out the items most affected by subsidies and shocks over the past two years, including fuel, electricity, gas, fares, childcare, tobacco and pharmaceuticals, and prices still rose 1.1 per cent in the quarter and 3.4 per cent over the year, up from 2.6 per cent in mid-2025 (ABS, September quarter 2026).
For business owners, the more important detail is services. Prices set by businesses rather than governments rose 1.5 per cent in the quarter after just 0.5 per cent in the June quarter, taking annual market services inflation to about 3.5 per cent (ABS, September quarter 2026). Much of that jump came from July, when businesses lifted their annual prices by more than is normal for the start of a financial year. In plain terms, many of us put our prices up harder than usual, and the central bank has noticed.
The softer spots: housing and rents
There is some good news, though it is a mixed blessing. Housing-related components cooled. New dwelling costs were flat in September, the weakest month since May 2025, as a soft property market erodes builders’ pricing power. Those costs tend to follow established house prices closely, and with prices now falling we would expect this component to stop adding to inflation over the coming year and start subtracting from it. Rents rose 1.0 per cent in the quarter and annual rent inflation is about 3.6 per cent, around its lowest since 2022, even though vacancies remain tight (ABS, September quarter 2026).
For commercial borrowers, falling residential values are a double-edged sword. They help the inflation outlook, which supports the case that any tightening will be measured. But they also affect the security many owners offer, because a good number of small and mid-sized businesses have a residential property sitting behind their facilities.
What the RBA is likely weighing
Our reading is that the data gives the board a reasonable basis to move on Tuesday, and that markets have been leaning that way. We are not in the business of predicting central bank decisions, and you should treat any call on 3 November as uncertain until it is announced. What we can say is that the longer-term message looks clear. Inflation is likely to remain above the 2 to 3 per cent target range well into 2027, and getting back inside it by the 2027-28 financial year requires the slowdown in activity seen this year to be sustained through next year. The RBA would want to see economic growth stay well below the roughly 2 per cent speed limit for most of 2027 before it could be confident that the job is on track.
That has a direct implication for planning. A single rise, if it comes, is better thought of as a signal about the path than as a one-off event. If domestic demand recovers faster than expected, it becomes hard to push inflation below 3 per cent, and the case for holding rates higher for longer strengthens.
What this means for business lending
Business borrowers feel rate moves in different ways depending on how their debt is structured. Variable-rate overdrafts, lines of credit and working capital facilities reprice quickly, usually within a cycle or two. Fixed-rate equipment and commercial property loans are insulated until the fixed term ends, at which point the borrower resets at whatever the market then offers. Non-bank and private lenders price off their own cost of funds and risk appetite, so their rates tend to move in a looser relationship with the cash rate, but they rarely fall just because the banks hold still.
The other consequence of sticky inflation is that credit appetite can tighten even without a rate move. When lenders expect rates to stay higher for longer, they get more careful about serviceability buffers, interest cover, and the quality of the security offered. We would expect assessments on commercial property and on cash-flow lending to remain disciplined, particularly for businesses in sectors exposed to weak consumer demand.
Five decisions worth making now
First, review your debt structure before the meeting, not after. List every facility, its rate type, its expiry and its covenants.
Second, consider whether fixing part of your borrowing makes sense. Fixing is not about guessing the peak. It is about giving the business a known cost on the portion of debt that supports long-lived assets, so the budget survives a few more surprises. A split between fixed and variable often suits businesses that want certainty without losing the ability to repay early.
Third, test your cash flow against a higher rate. Take your current interest bill and add another 0.5 to 1.0 percentage point. If the answer makes your interest cover or your lender’s covenants uncomfortable, that is the time to talk to us, while you have options, rather than when a facility is due for review.
Fourth, think carefully about expansion timing. If your pricing power is real, because you were among the businesses able to lift prices in July without losing customers, you may be well placed to invest. If you raised prices and saw volumes slip, the more cautious course may be to protect working capital first. Asset finance, including equipment loans and leases, can often fund growth without tying up cash, and the fixed-rate nature of many of those products offers some protection if rates rise.
Fifth, review the security behind your facilities. If a residential property sits behind your business borrowing and values are softening in your area, check how much headroom you have. Strengthening your position before a lender revalues the security is far easier than doing it afterwards.
Where refinancing fits
Refinancing is not only about chasing a lower rate. In a period like this, the better questions are whether your current lender is still the right fit, whether your facilities match how your business actually earns and spends cash, and whether you are paying for features you do not use. A refinance can consolidate several facilities into one, extend a term to ease monthly repayments, or move you to a lender whose appetite for your sector is stronger. It is also a good time to compare bank and non-bank options side by side.
Timing matters too. Applications take time to assess, and lender credit policy tends to tighten, not loosen, when the rate outlook turns. If you suspect you will want to change something in the next six to twelve months, starting the conversation early gives you more choice and less pressure.
The bigger picture
None of this is a reason for alarm. The point is that the economy is moving into a phase in which inflation is stubborn, growth is soft, and housing is weak, and that combination calls for careful, deliberate balance sheet management rather than reactive decisions. The businesses that tend to come through these periods well are the ones that know their numbers, understand their debt, and have a lender relationship that works for them before they need it to.
Let us help you think it through
If a rate rise on Tuesday would put pressure on your facilities, or if you are weighing up a refinance, an equipment purchase or a property deal, we are always happy to have a no-obligation conversation. Matt can walk you through your current structure and the options available, with no pressure and no jargon.
If you would simply like a second opinion on how your debt is set up, a short chat is often all it takes to see whether anything needs attention. Get in touch with Matt whenever suits you.
Disclaimer: This article is general information only and does not take into account your objectives, financial situation or needs. It is not personal financial, tax or credit advice. You should seek independent professional advice before making any decision. Statistics are drawn from published ABS data as at 30 October 2026 and may be revised. Interest rates and lender policies can change without notice.
