Breaking: RBA increases interest rates

Welcome to our live coverage of the Reserve Bank of Australia (RBA) monetary policy board’s second meeting of the year.

The board has increased the cash rate to 4.10%.

Jump to key updates

RBA PRESSER

RBA governor Michele Bullock. Picture: Christian Gilles

Bullock: Interest rate hike is ‘hard for people with mortgages’

3:49 pm

Governor Michele Bullock has said the decision to hike the cash rate will be challenging for those with a home loan but warned it was crucial the RBA act quickly.

“I understand this is tough news for people with mortgages and the fact that petrol prices are up so substantially as well is just another problem,” she said. “I cannot personally tell people how to manage their finances, but I do understand it is going to be hard for people.”

Ms Bullock continued: “For people with mortgages, all they see is the cash flow and it’s tough, but if we don’t do what we think we need to do, the outcome will be worse for people. People hadn’t seen high inflation until 2022 and that gave people a taste of what happens when inflation gets a roll on.

“It will be much worse if inflation gets built into the fibres; we will see all costs going up and that will be a much worse outcome.”

Bullock: Split vote was an issue of timing

3:42 pm

All RBA board agreed a second rate hike would have needed to happen, with governor Michele Bullock confirming the split vote on today’s rise was around timing.

Speaking to media, Ms Bullock said the board members had “a very robust conversation” about holding off on a hike until May.

“This would have given us an opportunity to consider more data on inflation and the labour market and would also have perhaps provided a bit more clarity on the potential impacts of the conflict in the Middle East. The discussion was very much centred around the timing of a rate increase.

“All board members agreed another rate increase was needed to address domestic inflationary pressures. The board decided raising the cash rate was the right call. The members that voted that hold, were voting to hold in a hawkish sense, they were still focused on the fact that there would probably need to be another rate rise.”

RBA governor to face media questions over board decision

3:20 pm

Governor Michele Bullock is set to speak to the media shortly to talk through the board’s decision. It will be a chance to dive into members’ deliberations around hiking the cash rate, as well as provide insight into the possible scenarios influencing decision making at the moment.

Ms Bullock will likely explain why board members were so split on today’s decision and what other options may have been on the table in this testing context. An insight into the board’s forecasting process and short- and medium-term economic outlook is also expected.

Questions for the governor from journalists are expected to focus heavily on managing rising inflation against the backdrop of fasting-moving warfare across the Middle East.

Pressure will also be on Ms Bullock to divulge how decisive and proactive the bank is willing to be with rate hikes this year if global volatility worsens in the coming months.

RBA warns Aussies to expect high inflation

3:11 pm

Australian households are facing a “material risk that inflation will remain above target for longer than previously anticipated”, the Reserve Bank has said in a statement.

Following confirmation of a rate hike today, the RBA said short-term measures of inflation expectations have already risen beyond temporary factors it can look past.

“The board judged that the labour market has tightened a little recently and capacity pressures are slightly greater than previously assessed,” the statement read. “The risks have tilted further to the upside, including to inflation expectations. It was therefore appropriate to increase the cash rate target.”

The bank did not shy away from suggesting more rate hike could be around the corner, in line with governor Michele Bullock’s recent comments that “every meeting is live”. The statement said the board is “focused on its mandate to deliver price stability and full employment” and “will do what it considers necessary to achieve that outcome”.

RBA says Middle East conflict risks are ‘substantial’

2:58 pm

Less than three weeks of US-Israel coordinated attacks across Iran are already posing “substantial risks” for Australia and “material uncertainties about the outlook for domestic economic activity and inflation”, according to the RBA.

In a statement accompanying its decision to increase the cash rate today for a second consecutive time, it was revealed just five of the nine board members voted for a hike, despite global tensions.

“A longer or more severe conflict could put further upward pressure on global energy prices; this will push up near-term inflation and could also increase inflation further out if it impairs supply capacity or price rises get built into longer term inflation expectations,” the statement read.

“Higher prices and prolonged uncertainty may cause growth to be lower in Australia’s major trading partners and also in Australia. The board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions.”

How much this rate hike will mean for your mortgage

2:45 pm

Following the RBA’s announcement that the cash rate has increased to 4.10%, Mortgage Choice has calculated the extra amount borrowers with various mortgage levels will soon need to pay.

The figures are rounded to the nearest $10 for ease and assume a starting rate of 6.01%.

Remaining repaymentCurrent monthly repaymentsMonthly repayments with today’s hikeMonthly extra cost$1,000,000$6000$6160$160$750,000$4500$4620$120$500,000$3000$3080$80$250,000$1500$1540$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 board hikes the cash rate to 4.10%

2:31 pm

The Reserve Bank has increased the cash rate to 4.10% in a widely expected move that marks the second consecutive hike after more than two years without any upwards movement.

Borrowers will be disappointed with the news, with the benefits of last year’s three rate cuts now almost reversed. Cost of living pressures are likely to heighten as prices increase, with households now also set to face an increase to their monthly minimum mortgage repayments.

The cash rate is now back to where it was in July last year, though trimmed mean inflation is notably higher than it was then and geopolitical tensions and market instability has also increased.

This was the board’s second meeting for 2026, concluding its two-day deliberations. Its accompanying statement, expected in the next few minutes, will provide context around the board’s decision, including its latest views on how inflation, growth, and labour market conditions are being affected by the Middle East crisis.

Markets pricing in a rate hike from the RBA

2:14 pm

Market expectations for an interest rate rise have been flipping back and forth over the last week, with the latest data from the Australian Stock Exchange showing a 58% chance of a rate hike as of Monday. It’s a sizeable drop compared to how markets were feeling before the weekend, when Friday forecasts sat at a much higher 71% expectation for a rate rise.

Expectations for a hold were definitive at the beginning of March, hitting an exact 100% expectation on 2 March, immediately after the first strikes on Iran.

Shifting markets have seen forecasts gradually turn the other way over the last two weeks, jumping notably between 10 March and 11 March off the bank of Commonwealth Bank and NAB joining Westpac with a forecast for a hike.

The RBA Rate Indicator calculates the probability of a rate change using market-determined pricing from the ASX 30-Day Interbank Cash Rate Futures.

High interest rates a ‘sledgehammer’ to business confidence

2:02 pm

Plenty of the Reserve Bank’s caution around the interest rate pathway last year was down to ongoing concerns around low productivity levels in Australia and little incentive to strengthen business opportunities.

Ahead of another potential hike today, Business NSW chief executive Daniel Hunter said confidence has already nosedived following last month’s rate rise, with interest rates “a sledgehammer to business confidence”.

“Reforms to drive down the cost of doing business must happen as a matter of urgency,” he said. “Reducing tax burdens while also improving energy reliability, housing supply and enabling infrastructure are key priorities.”

An Economic Reform Roundtable hosted by treasurer Jim Chalmers was put together last August in a bid to set a consensus for boosting productivity across the country. While no legislation was announced on the spot, reform areas for priority policy attention were confirmed and include housing supply issues, skill improvement, artificial intelligence, and budget sustainability.

RBA board increasingly uncertain about interest rate path

1:46 pm

A consistent thread in the RBA’s recent communications has been its troubles with forecasting, along with governor Bullock’s concerns the board does not have a clear picture of where either inflation or interest rates are headed.

“There are lots of people out there who absolutely know with absolute certainty what we should be doing,” she said in Melbourne last month. “I never have that degree of certainty; I’m always a little bit doubtful.”

Ms Bullock also called Australians to be patient as the bank works though the challenging period and adapts its approach to external communicates, acknowledging the RBA “needs to be accountable to the public”.

“We are trying to be a lot more strategic with our communications now, identifying areas where we need to communicate more or we need to change our message,” she said. “There is layering within those communications, some parts are technical, some parts are simpler.”

All four big banks anticipating another rate hike

01:31 pm

All four of Australia’s biggest banks are expecting the RBA to raise the cash rate today with market volatility and inflation uncertainty persisting.

Westpac was the first to step out of the fold last week, revising its view in the wake of heightened concerns around the effects of higher fuel prices on domestic inflation.

NAB was quick to follow suit, with its change of forecast coming closely on the back of comments from RBA deputy governor Andrew Hauser, which hinted at the bank’s determination to put a lid on “toxic” inflation levels.

CBA is also anticipating a hike later this afternoon, with head of Australian economics Belinda Allen noting the “very different context” for the RBA’s meeting compared with what had been expected just two weeks ago. ANZ was the last bank to switch from a ‘hold’ to a ‘hike’ forecast, confirming its expectation late last Thursday.

Economic growth strengthens case for cash rate increase

01:13 pm

The economy is growing more strongly than the RBA had anticipated in its forecasting, strengthening the case for rates to go up as soon as today.

On a quarterly basis, Australia’s Gross Domestic Product (GDP) rose 0.8% in the three months to December, above the 0.7% growth widely anticipated among economists. The growth came from a broad range of areas but was boosted by increased government spending, household spending, summer sporting events, and data centre investments across the private sector.

Wages and employment opportunities tend to rise as the economy performs better, which can then open a risk of ‘overheating’ it. With Australia’s economy operating above expectations, the Reserve Bank will be watching closely to ensure labour shortages and higher inflation aren’t the result.

The solid growth is a promising overall rebound for the economy however, with 2024-25 the weakest for domestic economic growth since the early 1990s, excluding 2019-20.

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Home prices still rising after February interest rate hike

12:59 pm

National home price growth picked up last month despite the RBA’s 0.25% rate hike, with gains largely consistent with the seasonal lift in property market activity that generally follows the summer holidays.

National home prices increased 0.5% over February, taking the national median home value to $897,000.

Sydney remains the country’s most expensive city, despite growing more slowly than most other capitals. Median prices in Brisbane surpassed $1,000,000 for the first time last month, with Perth and Adelaide also close to cracking the seven-figure mark thanks to strong double-digit growth over the last year.

The price of a home in Australia is now 9.1% higher than it was 12 months ago, adding around $90,000 to the value of the median home. As inflationary cost pressures bite, units have begun to outpace houses over the past quarter, suggesting demand may be shifting toward more affordable properties while borrowing capacity is tight.

High inflation likely to push up rates

12:44 pm

The most recent Australian Bureau of Statistics data shows underlying inflation, also known as the trimmed mean, rose 3.4% over the 12 months to January. It’s a concern which opens the doors for a rate hike scenario today, with the trimmed mean being the RBA’s preferred inflationary measure to consider when it comes to monetary policy and setting the cash rate.

Headline inflation was stable throughout January, though still outside the bank’s target at 3.3% and hotter than economists had been expecting.

Managing expectations for inflation has proved a difficult game for the RBA board in recent months, with the bank having both overcooked and underestimated in its forecasting since inflation began to rise last October.

“We are not backward looking but forecasting is inherently difficult and we do our best,” Ms Bullock said in Melbourne last month. “We don’t have a situation where it’s very clear what we have to do.”

Economist prediction: Rate hike expected today

12:28 pm

Another rate hike today is the forecast from the realestate.com.au economist team, with both market assumptions and the RBA’s own communications central to this expectation.

“A rate hike is looking pretty likely, with markets pricing in about a 70% chance of a hike,” REA Group executive manager of economics Angus Moore said. “That’s a big change from a week ago, when it was only around a one-in-five chance.

“That big change is due to comments by the RBA deputy governor last week that were seen as quite hawkish. That all points to a pretty good chance we see a hike in March.”

Speaking in the US, Andrew Hauser last week said the economic data the bank had received showed there is “clearly information on the upside for inflation over that period”. Mr Hauser also said there would be “a very genuine debate” among board members this week about whether to hike.

Middle East tensions a threat to interest rates

12:16 pm

Market volatility from the escalating conflict across Iran and the Middle East has already had noticeable impacts on Australia’s already delicate inflation situation, heightening the chance for another rate rise today.

Sharp spikes in oil prices over the last two weeks have caused significant upheaval in global markets, with the war-induced energy shocks pushing up fuel prices across Australia.

Fuel makes up 3.3% of the goods considered as part of the Consumer Price Index (CPI) calculation – an impactful percentage of what is used to measure inflation in Australia. With headline inflation already running significantly above the RBA’s 2-3% target range, interest rates are likely to need to go up to help with stabilisation.

RBA governor Michele Bullock has only spoken publicly once since the Israel-US coordinated attacks across Iran begun. Appearing at a business summit in Sydney, she said she was cautious not to put a timeline on the impact war could have on domestic inflation.

Welcome to this live RBA cash rate decision coverage

12:01 pm

In just over two hours, board members will wrap up two days of discussions and announce whether the 3.85% cash rate will change.

After hiking rates in February for the first time in more than two years, there’s a strong chance Aussies could be in for yet more tightening from today.

Anticipation of another hike has been a tough blow after what has already been a disappointing start to the year for many households. Mortgage repayments have already risen for most after last month’s rate hike, while the resurgence of inflation has brought cost of living concerns back in sharp focus.

Follow along with us over the next couple of hours as we bring you all the latest updates, news and forecasts from leading economists, big banks, and property and mortgage industry insiders.

Breaking: RBA increases interest rates

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