The Reserve Bank hiked the cash rate yesterday to 4.6 per cent, the fourth rate rise for 2026 and the highest level since November 2011.
Economists now expect another 25 basis point rise on Melbourne Cup Day.
This is not background noise. If you run a local business, this affects three parts of your operation right now. Customer spending, your own borrowing costs, and the decisions you put off last month.
Your customers are redirecting money to debt
Higher rates force some customers to redirect spending towards debt servicing, further dampening sales and squeezing margins.
A $600,000 mortgage now costs an extra $91 a month from this rise alone, or nearly $400 with all four of 2026’s rate rises combined.
That shows up differently depending on what you sell. Discretionary spend goes first. Tradies booking kitchen renos see it. Cafes that do well on the weekend breakfast trade see it. Retail that relies on impulse buying sees it.
If you have not already done it, look at your sales by category for the past three months and compare them to the same period last year. Look for the line items that are softening. That tells you where your customers are cutting back, and that tells you where to adjust your stock levels, labour, and your own expectations for the next quarter.
A $600,000 mortgage now costs an extra $91 a month from this rise alone, or nearly $400 with all four of 2026’s rate rises combined.
Your own business loan just got more expensive
If you carry business debt on a variable rate, your repayments just went up. Macquarie Bank announced it will pass on the rate hike in full to mortgage borrowers, lifting variable home loan reference rates by 0.25 per cent from October 15. The others will follow.
Call your lender this week. Not to negotiate, just to confirm your new repayment amount and the date it starts. Write it down. Then update your cash flow forecast for the next six months with the new figure. If the forecast shows a pinch point in December or January, deal with it now, not when the account runs dry.
If you are on a fixed rate, check when it expires. If it is coming up in the next six months and you have been waiting for rates to drop, adjust that assumption. The RBA said inflation is still too high and a further tightening in financial conditions is warranted. That is not the language of a central bank about to cut.
Three things to do this week
This is not about panic. It is about looking at your numbers with the new interest rate baked in, and making decisions this week instead of next quarter when the damage is done.
Prompted by ABC News.