The RBA has increased the cash rate to 3.85%.
Our coverage of the RBA's interest rate decision has concluded
Thank you for joining us for the RBA's interest rate decision
4.32pm
This concludes our live coverage of the RBA’s first cash rate decision for 2026. To recap, the board has added 0.25% to the cash rate, bringing it to a seven-month high of 3.85%. The decision marks the first time the cash rate has been increased since November 2023.
In the media press conference following the announcement, governor Michele Bullock said the board was wary about growing inflation, low productivity, private demand growth and other general capacity pressures.
When asked whether today’s hike is the start of a new tightening cycle, Ms Bullock said the board “isn’t ruling anything in or out” when it comes to the possibility for more rate rises. The board will make its next cash rate decision after its 16-17 March meeting.
In the meantime, follow along with all our news on realestate.com.au and Mortgage Choice to learn more about the reaction to today’s decisions and see exclusive forecasts and outlooks from our in-house team of economists.
Michele Bullock will deliver the RBA's cash rate decision this afternoon. Picture: Getty Images
RBA hammered over drastic inflation statistics
4.09pm
Governor Michele Bullock has struggled to mount a strong defense against media questioning over the interest rate rise and the Reserve Bank board’s failure to maintain inflation within its 2-3% target range.
It was noted in the media conference by the Sydney Morning Herald that inflation has only been within the all-important target a total of eight times in the last 40 quarters. This represents the period of time between January 2015 and December 2025.
“It’s not a science, it’s a bit of an art, and there are so many things that can push us off course,” Ms Bullock said in the board’s defense. “There were things that pushed us off course before Covid, there was Covid which pushed us completely off course and we’ve just got to respond as best we can.
“I have no particular response other than to say I and the board are determined to bring inflation back down into the band.”
Governor Bullock: ‘The strategy hasn’t changed’
3:58pm
The RBA is facing tough questions over whether its forecasting is reliable, with governor Michele Bullock acknowledging to media that there is a high level of uncertainty.
Speaking at this afternoon’s press conference, Ms Bullock said: “We have to make assumptions, because we have to have forecasts, but we know forecasts are very uncertain the further out we get.”
Following the rate hike, she confirmed the board will remain cautious and was characteristically tight lipped on whether Aussies could be facing another hike as soon as next month.
“Could we do a lot of rate rises and bring inflation down very quickly? Possibly but it might have big implications for the unemployment rate and the economy. I’m not predicting there will be more rate rises but I’m also not saying that if inflation does remain too high that there mightn’t be. I’m going back to saying we aren’t ruling anything in or out.”
RBA governor Michele Bullock issues grim warning for mortgage holders
3:45pm
Speaking to media following the cash rate hike, RBA governor Michele Bullock has said Aussie mortgage holders face a difficult reality of either higher repayments or greater expense across the board in the long run if inflation is not brought back into the 2-3% target range.
“The underlying pulse of inflation is too strong,” she warned. “[A hike] is not the news that Australians with mortgages want to hear, but it is the right thing for the economy. I understand it is hard, but the alternative is even harder.”
Ms Bullock said the board had reassessed its forecasts around the inflation pathway, adding: “We cannot allow inflation to get away from us again. The cash rate was no longer at the right level to get inflation back to target in a reasonable time frame.”
The governor said the board “remains focused on returning inflation to target” and noted “high inflation hurts all Australians.”
RBA governor to face media questions about interest rate rise
3:32pm
Governor Michele Bullock will address the media shortly to speak through the board’s decision. It will be a chance to dive into the board’s deliberations while finalising its choice to hike rates, as well as provide insight into the possible other scenarios members discussed.
The RBA board typically speak through their forecasting process and their economic outlook before announcing a cash rate decision, with Ms Bullock also expected to divulge how united or divided members were on today’s decision and what other options may have been on the table.
Questions for Ms Bullock from journalists are expected to centre on rising inflation and how its impact could be felt if global political tensions heighten over the next few months.
The media will also be looking to the governor to justify the board’s decision and to provide a transparent look into how the bank anticipates managing inflation throughout the rest of the year.
RBA confused over financial conditions
3.16pm
The RBA board members were unanimous when it came to the decision to increase the cash rate to 3.85% today, but have acknowledged they remain uncertain about the exact state of the economic conditions the nation is living in.
In its statement accompanying the decision, the board said financial conditions had eased over 2025. Despite this, it added it is “uncertain whether they remain restrictive”.
“Credit is readily available to both households and businesses and the effects of earlier interest rate reductions are yet to flow through fully to aggregate demand, prices and wages,” the statement read. “More recently, the exchange rate, money market interest rates and government bond yields have risen following a rise in market expectations for the cash rate.”
The board added that the continuing tight labour market had also spurred the hike decision, but added conditions “have stabilised in recent months in line with the pick-up in momentum in economic activity”.
Read more: RBA hikes the cash rate in February in blow to households
RBA board statement: High inflation to persist
3:02pm
The Reserve Bank has just released its accompanying statement to the decision to hike the cash rate today, which points the finger directly at rising inflation as expected.
“A wide range of data over recent months have confirmed that inflationary pressures picked up materially in the second half of 2025,” it stated. “Inflation is likely to remain above target for some time and it was appropriate to increase the cash rate target.”
The board pointed out part of the uptick is linked to temporary factors. This includes the run off of electricity rebates, which the governor Michele Bullock had previously confirmed is behind high headline inflation numbers recently.
“It is evident that private demand is growing more quickly than expected,” the statement read. “The board has been closely monitoring the economy and judges that some of the increase in inflation reflects greater capacity pressures [and] labour market conditions are a little tight.”
How much more your home loan will cost following the interest rate rise
2:46pm
Following the RBA’s announcement that the cash rate has increased to 3.85%, Mortgage Choice has calculated the extra amount borrowers with various mortgage levels would need to pay from next month.
The figures are rounded to the nearest $10 for ease and assume a starting rate of 5.76%.
| Remaining repayment | Current monthly repayments | Monthly repayments with today’s hike | Monthly extra cost |
| $1,000,000 | $5840 | $6000 | $160 |
| $750,000 | $4380 | $4500 | $120 |
| $500,000 | $2920 | $3000 | $80 |
| $250,000 | $1460 | $1500 | $40 |
Borrowers should expect variable rates to lift almost immediately following the announcement, with higher repayments likely to kick in for many from the next repayment cycle.
Though fixed rate mortgage holders will not see any changes from today’s rate hike, those close to the end of their fixed period are in line for higher variable rates when it does come time to refinance their home loan and lock in a new deal.
RBA hikes interest rates 0.25%
2:30pm
The Reserve Bank has increased the cash rate to 3.85% in a widely expected move that marks the rate rise in more than two years.
It’s disappointing news for borrowers coming off the back of three rate cuts in 2025 and looking for even more relief as cost of living pressures continue to bite. Households with a mortgage can now expect to be paying more towards their loan until the RBA injects easing back into the market.
The cash rate is now back to where it was seven months ago, though trimmed mean inflation was a far lower 2.7% in the 12 months to July than it is currently.
This was the board’s first meeting for 2026, concluding its two-day deliberations. It’s accompanying statement, expected in the next few minutes, will dive into the different factors that led the board to the decision, including its expectations for inflation, growth, and labour market conditions over the next month.
Read more: RBA hikes rates for first time in two years: How much will your mortgage cost?
Mortgage holders expect a rate rise
2:18pm
Ahead of this first rates decision of the year, the latest Westpac-Melbourne Institute Consumer Sentiment Index shows about two thirds of those with a view now expect mortgage rates to rise in 2026.
Published earlier this month, the index factors in how borrowers feel about the short- and medium-term economic outlook, the timing of spending decisions, and how their family finances stack up compared with 12 months ago.
Pessimists have outnumbered optimists across every component of the index for the first time since October 2024, which it attributed to the recent “sharp turn in interest rate expectations”.
A borrower with a $500,000 mortgage can expect to pay approximately $80 a month more on their loan if the RBA pushes through a 0.25% rate hike today. Repayments would jump $120 on a $750,000 mortgage and $160 on a $1,000,000 mortgage. Mortgage Choice has calculated this using an assumed starting rate of 5.76%.
Time to review your home loan? Speak to a broker.
Economists predict RBA will increase interest rates
2:01pm
While there is a case for the RBA to keep rates on hold today, REA Group senior economist Anne Flaherty confirms a rate hike is the expected outcome from the board’s first meeting for the new year. She adds the recent inflation uptick is the biggest driving factor for market expectations, with recent data having backed the bank into an uncomfortable corner where a change in policy approach is necessary.
“Over the final week of January CPI data for the year ending December was released, showing that headline inflation has increased to 3.8%, while trimmed mean inflation rose to 3.3%,” she said.
“This was the highest level for inflation since June 2024. Higher interest rates impact borrowing capacities and are likely to weigh on consumer confidence.”
Ms Flaherty added: “While home prices are still expected to grow in 2026, higher interest rates are likely to place downward pressure on the pace of growth.”
Greenland pressures could prevent a rate hike
1:42pm
One of the frontrunning factors that might save Aussies from a rate rise this afternoon is the United States’ ongoing dispute with Denmark over the future of Greenland.
President Donald Trump has threatened several European countries keen on preserving Greenlandic authority of the North American island with high tariffs, wreaking havoc on stock and bond markets this month.
While the Australian dollar had held up well against international pressure, the ongoing dispute is one of the factors that could sway the bank to hold the cash rate in place at 3.60% in a bid to balance inflationary risks.
“The impact of a breakdown in relations and possible retaliatory action, such as European Union ceasing to implement the already agreed trade deal, adds to growth risk and is not helpful for maintaining inflation credibility,” said Commonwealth Bank macro and rates strategist Michael Tang. “It will create some risk aversion, adding to curve steepening pressure.”
Read more: Could Greenland tensions save Aussies from a risky rate hike?
Big banks interest rates predictions
1:29pm
While the big four banks are often aligned when it comes to rates expectations, the lead up to today’s decision as spurred some varied forecasting paths.
Commonwealth Bank amended its previous view to a likely 0.25% rate rise, but said the outlook remains uncertain. NAB have also priced in a hike, the first of two it is anticipating before 30 June.
The two banks locked in these expectations back in December off the back of rising concerns about the uptick of both headline and underlying inflation.
Westpac and ANZ had been presenting a more dovish view on the bank’s trajectory, with both forecasting a rate hold up until the release of the December inflation data last week.
Both banks are now also predicting a rate hike for this afternoon and are united in the view that it is the only tightening the bank should need to implement before a sustained period of rate holds.
Home prices up in January
1:17pm
National home prices continued to rise in January, increasing by 0.2% to sit 8.4% higher than a year ago. The average price of a home in Australia is now $883,000, although a rate rise today would drive some downward pressure on property prices as borrowing capacity lowers and buyer confidence cools.
There were price falls in Melbourne (-0.1%), Hobart (-0.4%) and Canberra (-0.1%), while Darwin was flat. Adelaide (+0.9%), Brisbane (+0.4%) and Perth (+0.3%) were on the up, according to the PropTrack Home Price Index. Australia’s most expensive city, Sydney, saw a slight 0.1% increase.
“January is a relatively quiet month for housing markets, with lighter sales volumes, which makes it harder to assess the momentum in home prices,” REA Group executive manager of economics Angus Moore said.
“Home prices are still likely to head to new highs in 2026, but at a slower pace of growth than in 2025.”
Read more: Home prices hit new peak as expert warns affordability will not improve
Interest rate hike prediction
1:03pm
Could we see a rate hike from the RBA today? More than likely. Inflation is higher than the bank wants and well outside its inflation target of 2-3%.
Underlying price pressures are also still present in the market. While headline inflation may fall, core inflation may remain ‘sticky’, meaning the bank is likely to tighten policy until there is proof of sustained cooling.
The tight jobs market with both low unemployment and strong growth could also fuel the bank to hike rates. This is because faster wage growth can often push up prices, meaning the costs are pushed back onto consumers which in turn often sees inflation jump upwards.
The domestic economy’s bounce back from its sluggish progress mid last year could also prompt a rate rise. Household spending remains strong while the RBA has also struggled to accurately anticipate how resilient the economy has been. This uncertainty could see a hike to mitigate upcoming risk.
Inflation on the up as rate hike looms
12:47pm
Latest data from the Australian Bureau of Statistics last week showed an inflation uptick well above market expectations, driving things back up to where they were in October.
The Consumer Price Index rose 3.8% in the 12 months to December, a strong rise on the 3.4% recorded in November. While discretionary spending generally drives a higher-than-usual reading in the lead up to Christmas, the increase will likely be enough to kick off a tightening cycle today.
December inflation data coming in hot pushed both Westpac and the ANZ to amend forecasts last week, locking in expectations of a rate hike today and bringing them into line with Commonwealth Bank and National Australia Bank (NAB) expectations.
| Month | Headline CPI (%) | Trimmed mean (%) |
| Dec 2025 | 3.8 | 3.3 |
| Nov 2025 | 3.4 | 3.2 |
| Oct 2025 | 3.8 | 3.3 |
| Sep 2025 | 3.6 | 3.2 |
| Aug 2025 | 3.2 | 3.0 |
| Jul 2025 | 3.0 | 3.0 |
Markets pricing in an interest rate hike
12:29pm
The latest data from the Australian Stock Exchange shows that market expectations for an interest rate rise are currently sitting at 72%.
It’s been a turbulent first month of the year when it comes to market expectations, with the tracker having shown just a 22% chance of a rate cut as recently as 16 January. This expectation jumped considerably to reach 60% less than a week later off the back of labour market data for December, which showed the unemployment rate had decreased to 4.2%.
The RBA Rate Indicator calculates the probability of a rate change using market-determined pricing from the ASX 30-Day Interbank Cash Rate Futures.
RBA’s first meeting for 2026
12:16pm
Today’s meeting will mark the first cash rate decision for 2026. The start of February sees Aussies pass an important milestone of 12 months since interest rates were first cut after a four-year dry spell.
The last time the RBA increased interest rates was all the way back 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 cash rate cuts.
The bank’s careful stepping stone approach to easing throughout 2025 saw it intersperse each cut with a ‘hold’ decision. This was part of its well-documented narrow path policy approach to ensure a ‘soft landing’ – a phrase use to describe the hope the bank could bring inflation back down into target without kicking off a recession.
This caution worked well for the bank until October, when it’s forecasting failed to account for a new inflation spike.
Welcome to our live coverage of the first cash rate decision of 2026
12:01pm
Welcome to our live blog. We will be here all afternoon throughout the lead up to the Reserve Bank of Australia’s (RBA) next decision on the cash rate. Keep up to date in real time as we find out whether the cash rate will stay at 3.60% or whether we could finally see a hike after more than two years.
The RBA held rates steady in December, but ongoing inflation and a surprisingly resilient economy have put the bank under pressure. Just a few months ago, forecasts suggested we might see a rate cut early this year — a far cry from the picture we’re facing now.
In hard news for mortgage holders, most analysts expect the RBA to hike rates today, while borrowing costs are unlikely to drop while inflation remains stubborn.
Stay around for our updates and the latest insights for homeowners, borrowers and savers, as well as for the RBA’s afternoon press conference.
Read more: Big banks tell borrowers to brace for RBA rate hike
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