RBA holds rates steady: What it means for 2026
Australian homeowners with a mortgage hoping for an early Christmas present from the Reserve Bank will be left disappointed by the outcome of today's December Monetary Policy Board Meeting.
The Board held rates steady for a third consecutive meeting meaning that - barring any unexpected developments - the cash rate will remain at 3.60% until at least February.
Leading up to the meeting, the overwhelming consensus had been that the RBA would keep the cash rate steady after the release of hotter-than-anticipated inflation figures last month.
The headline inflation rate rose to 3.8% in the 12 months to October, according to the Australian Bureau of Statistics - up from 3.6% in the year to September.
In its post meeting statement, the RBA Board acknowledged the ongoing challenge presented by inflation.
"The recent data suggest the risks to inflation have tilted to the upside, but it will take a little longer to assess the persistence of inflationary pressures. Private demand is recovering. Labour market conditions still appear a little tight but further modest easing is expected.
"The Board therefore judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve."
Will interest rates rise or fall in 2026?
With the final monetary policy meeting of the year done and dusted, attention has already started to focus on what action, if any, the RBA may take in 2026.
As recently as a few months ago, many experts were predicting further reductions in the cash rate in 2026 - it was just a matter of timing. That's no longer the case.
The recent resurgence in inflation has seen forecasts shift though, with some now questioning whether the RBA's next move will be to cut or increase interest rates.
In a recent survey conducted by Finder, half of the experts polled agreed that we have already reached the bottom of the current rate cycle, while the other half believe that rates may still fall further.
Elsewhere, three of the four major banks are now anticipating that the cash rate will remain steady - at least, in the early stages of 2026.
"Given this recent inflation pressure, we no longer see a rate cut from the RBA in the first half of 2026 and expect the cash rate to remain at 3.60% for an extended period," wrote members of ANZ's economic team in an update released last week.
Westpac remains the only major bank still forecasting interest rate cuts in 2026, penciling in rate reductions in both May and August.
Ultimately, it's a wait-and-see situation. In the meantime, the Monetary Policy Board will have a 7-week break before returning for the first meeting of 2026 on February 2 and 3.
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