The Reserve Bank of Australia (RBA) has indicated that interest rate reductions are not anticipated in the near future, with an extended period of holding rates or a potential increase being the primary considerations for 2026. This position has been articulated by both Governor Michele Bullock and Deputy Governor Andrew Hauser. The RBA's first monetary policy board meeting of 2026 is scheduled for February 2-3, where an interest rate decision will be announced. The central bank continues to monitor incoming economic data, particularly inflation figures, as it aims to maintain price stability within its 2-3% target range.
RBA Stance on Monetary Policy
In late 2025, RBA Governor Michele Bullock stated that interest rate cuts were not foreseen "on the horizon for the foreseeable future," identifying an extended hold or a rate rise as the primary options for the board's consideration. This sentiment was echoed by Deputy Governor Andrew Hauser, who joined the RBA in 2024. Mr. Hauser confirmed that a recent decline in inflation had not altered the bank's outlook on immediate rate reductions.
The RBA's mandate involves maintaining consumer price inflation between 2% and 3% and achieving full employment. Mr. Hauser reiterated that inflation above 3% is considered elevated. The RBA makes monetary policy decisions on a "meeting-by-meeting" basis, emphasizing a holistic view of the economy rather than relying on single data points. While the bank's central projections do not currently include immediate rate cuts, Mr. Hauser acknowledged scenarios where inflation could return to target without further rate increases, potentially even allowing for future cuts. These scenarios could include a weaker economy, a global financial shock, or increased productivity, though they are not the RBA's central case. The current cash rate of 3.6% has been maintained since August 2025, following a period in the previous year where the RBA implemented three interest rate reductions.
Key Economic Indicators
Consumer Price Index (CPI) data is a significant release for the RBA and financial markets, despite the bank's advice against over-interpreting single data points. Upcoming data releases from the Australian Bureau of Statistics (ABS) include:
- November 2025 Monthly Consumer Price Index (CPI): Wednesday, January 7, 2026
- December 2025 Labour Force Figures: Thursday, January 22, 2026. The unemployment rate in November 2025 remained at 4.3%, although employment levels decreased.
- December 2025 Monthly Consumer Price Index (CPI): Wednesday, January 28, 2026
The December quarterly CPI data, scheduled for release at the end of January, has been highlighted by Deputy Governor Hauser as "crucial" for informing the RBA's view on inflation ahead of its next policy meeting. For the year ending November, the CPI recorded a 3.4% increase, with the RBA's preferred trimmed mean measure of underlying inflation standing at 3.2%. The RBA targets inflation over a one-to-two-year period. The bank's current expectation is that underlying inflation for the December quarter of 2025 might be slightly higher than the forecast issued in November. The November forecasts had previously anticipated inflation above 3% into 2025 and 2026, gradually returning towards the 2.5% target, under the assumption of eventual interest rate reductions.
Upcoming RBA Meetings and Forecasts
The RBA's first monetary policy board meeting of 2026 is scheduled for Monday, February 2, and Tuesday, February 3. The interest rate decision will be announced at 2:30 PM AEDT on February 3.
The RBA monetary policy board is scheduled to meet eight times in 2026. Decisions are released at 2:30 PM Sydney time (AEDT/AEST) on the following dates:
- February 3
- March 17
- May 5
- June 16
- August 11
- September 29
- November 3
- December 8
Following each decision, Governor Michele Bullock conducts a press conference. A statement from the board accompanies the decision, and the minutes of the meeting are released two weeks later. Alongside its February interest rate decision, the RBA will publish its quarterly Statement on Monetary Policy, which will include updated economic forecasts.
Market and Economic Analyst Projections
Current market pricing, as indicated by Bloomberg data and RBA Deputy Governor Hauser's comments, suggests a 34% (approximately one-third) probability of a rate hike in February. This implies that the most probable outcome for the next meeting is a steady cash rate of 3.6%. By June, market pricing indicates a 93% chance of a rate hike, with a 0.25 percentage point increase fully priced in by August. If current market pricing, which suggests a cash rate rise to nearly 4% by year-end, holds, future RBA forecasts will incorporate this assumption.
Major bank economists have presented varied forecasts:
- NAB: Predicts two 0.25 percentage point hikes, in February and May.
- CBA: Forecasts one hike in February.
- Westpac and ANZ: Expect an extended period of rates on hold. ANZ acknowledges a risk of a hike in early 2026, while Westpac identifies risks on both sides of the monetary policy stance.
Impact on Households
RBA interest rate adjustments directly affect borrowing costs and savings returns for Australian households. Canstar analysis indicates that a 0.25 percentage point rate hike could increase minimum monthly mortgage repayments by $90 to $150 for loans ranging from $600,000 to $1 million.
Current average rates include:
- Average variable rate (existing owner-occupiers): 5.51%
- Average fixed rate (new owner-occupier loans, three years or less): 5.1%
Fixed rates increased in December 2025, with 43 lenders, including three of the four major banks, implementing hikes. Canstar's data insights director, Sally Tindall, stated an expectation that most, if not all, banks would pass on a full 0.25 percentage point increase to borrowers if the RBA implements a hike in February. The impact on savings rates is less uniform, with the average ongoing savings rate at 3.07%.
Global Economic Factors
Deputy Governor Andrew Hauser also addressed international economic factors, including geopolitical pressures. He cited the US strike on Venezuela as an example, noting its potential to create new geopolitical dynamics. Mr. Hauser suggested that if Venezuela, possessing significant oil reserves, were to increase its oil output, it could potentially lead to a decrease in global oil prices, which might benefit consumers. However, he clarified that these effects have not yet materialized, and the oil market's reaction has been subdued.