Join us for rolling coverage of the RBA’s cash rates announcement. Stay tuned for the announcement as it happens, plus insights from economists and industry experts.
Inflation is rising while an interest rate increase is looming
12:47 pm
The latest data from the Australian Bureau of Statistics last week showed inflation was well above market expectations, bringing things back to October levels.
The consumer price index rose 3.8% in the 12 months to December, a strong increase from the 3.4% recorded in November. While discretionary spending in the run-up to Christmas generally leads to a higher than normal outcome, the increase is likely to be enough to trigger a tightening cycle today.
December inflation data coming in prompted both Westpac and ANZ to adjust their forecasts last week, locking in expectations of a rate hike today and bringing them in line with Commonwealth Bank and National Australia Bank (NAB) expectations.
| Month | Headline CPI (%) | Trimmed mean (%) |
| December 2025 | 3.8 | 3.3 |
| November 2025 | 3.4 | 3.2 |
| Oct 2025 | 3.8 | 3.3 |
| September 2025 | 3.6 | 3.2 |
| August 2025 | 3.2 | 3.0 |
| July 2025 | 3.0 | 3.0 |
Markets are pricing in an interest rate increase
12:29 pm
The latest data from the Australian Stock Exchange shows that market expectations for a rate hike are currently at 72%.
It’s been a turbulent first month of the year in terms of market expectations, with the tracker showing just a 22% chance of a rate cut as recently as January 16. This expectation rose significantly, reaching 60% less than a week later thanks to labor market data for December, which showed that the unemployment rate had fallen to 4.2%.
The RBA Rate Indicator calculates the probability of an interest rate change using market determined prices based on the ASX 30-Day Interbank Cash Rate Futures.
RBA’s first meeting for 2026
12:16 pm
Today’s meeting will mark the first decision on the 2026 cash rate. In early February, Aussies will reach a major 12-month milestone since rates were cut for the first time after a four-year dry spell.
The last time the RBA hiked rates was in November 2023 – the hike that took the cash rate to a 13-year high of 4.35%. Since then, borrowers and property seekers have felt the benefits of three cuts in cash rates.
The bank’s careful step-by-step approach to easing over 2025 ensured that each cut was alternated with a hold decision. This was part of its well-documented, narrow policy approach to ensure a ‘soft landing’ – a phrase used to describe the hope that the bank could bring inflation back below target without triggering a recession.
This caution worked well for the bank until October, when its forecasts did not take into account another spike in inflation.
Welcome to our live coverage of the first cash rate decision of 2026
12:01 am
Welcome to our live blog. We’ll be here all afternoon ahead of the Reserve Bank of Australia’s (RBA) next decision on cash rates. Stay tuned in real time as we discover whether the cash rate will remain at 3.60% or if we could finally see an increase after more than two years.
The RBA kept rates steady in December, but persistent inflation and a surprisingly resilient economy have put pressure on the bank. Just a few months ago, forecasts suggested that we could see a rate cut early this year – which is very different from the picture we face now.
The hard news for mortgage holders is that most analysts expect the RBA to raise rates today, while borrowing costs are unlikely to fall as long as inflation remains stubborn.
Stick around for our updates and the latest insights for homeowners, borrowers and savers, as well as the RBA’s afternoon press conference.
Read more: Major banks tell borrowers to brace for a rate hike by the RBA
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