The RBA lifted the official cash rate back up to 4.10% today to make it back-to-back rate rises in 2026.
Amid surging global oil prices and sustained higher inflation in Australia, today’s 0.25% increase was not unexpected by market analysts. The RBA explained its St Patrick’s Day hike was a response to risks both here and abroad.
‘Information since the February meeting suggests that some of the increase in inflation reflects greater capacity pressures. In addition, the conflict in the Middle East has resulted in sharply higher fuel prices, which, if sustained, will add to inflation. Short-term measures of inflation expectations have already risen. As a result, the Board judged that there is a material risk that inflation will remain above target for longer than previously anticipated,’ said the RBA in its statement.
Six weeks ago, Martin Place delivered a 0.25% rate increase – the first such move in just over two years.
It was big news.
The RBA rarely lifts rates back-to-back, preferring to assess how changes are flowing through the economy first. Which makes these consecutive hikes a clear sign that the Reserve Bank is very serious about the current situation.
The latest figures show that headline CPI held at 3.8% in January, unchanged from December. Meanwhile, trimmed mean inflation, the RBA’s preferred underlying measure, edged up from 3.3% to 3.4%. Which means this key metric is still above the target of 2–3% on both counts.
And the minutes from February’s RBA meeting showed concern that inflation could prove ‘more persistent’ than previously forecast. Canstar data shows that in the past two weeks, 27 lenders have hiked at least one of their fixed-rate loans.
Economists at the Commonwealth Bank – Australia’s largest home-loan lender – are in lock-step with this sentiment, expecting the RBA’s rate to reach 4.35% by May.
Amid global volatility in the Middle East, a strong local jobs market, and continued higher inflation in Australia, inflation is under real pressures right now. So, as it stands, there’s a real chance that all three rate cuts from 2025 will be rubbed out in 2026.
Today’s policy decision was close. Five members voted to increase the cash rate, and four members voted to leave the cash rate target unchanged at 3.85%. It’s already hard to believe 2026 started with an official cash rate of 3.60%.
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In addition, we are here to guide you on various strategies such as uncovering lower rates, enhancing savings, consolidating debts, and alleviating the impact of rising household prices.
Michael began his career in the finance industry over 35 years ago. He progressed through the ranks at the CBA in both retail and corporate lending, culminating in a senior position as a Corporate Relationship Executive. His decision to leave the bank in 2003 to become an independent mortgage broker was driven by his desire to assist everyday customers break through the jargon of the banking world and access the best loan products in the market. His experience is wide-ranging from helping first time buyers to large commercial enterprises. What Michael doesn’t know about home loans, simply isn’t worth knowing!