![\"RBA](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/01\/48ae4493363b3210bdeb89831acb6c64.jpeg\")
<\/p>\nThe RBA’s first meeting of the year is a month away, but that doesn’t mean interest rate watchers are still on holiday.\u00a0<\/p>\n
Mortgage borrowers and savers may have used the new year as an excuse to get their financial affairs in order, but things could be set to change within a matter of months.<\/p>\n
The outlook for interest rates in Australia underwent a significant shift at the end of last year.<\/p>\n
Talk of further rate cuts, after the three delivered in 2025, moved to discussions of an extended pause and then, just as quickly, potential rate hikes.<\/p>\n
In her final remarks of the year, RBA governor Michele Bullock laid the cards on the table.<\/p>\n
She said she didn’t see rate cuts “on the horizon for the foreseeable future” and noted an extended hold or a rate rise were the options the board would be tossing up.<\/p>\n
High-profile economists took the red pen to their forecasts as a result.\u00a0<\/p>\n
This week will bring a piece of key economic data for the RBA, and those betting on the trajectory of rates, to mull over \u2014 the consumer price index will be released on Wednesday by the Bureau of Statistics.<\/p>\n
While the RBA has cautioned against reading too much into a single data release, there is no doubt this first inflation reading of the year will help set the tone.<\/p>\n
Here’s what to watch and when to expect it in 2026.<\/p>\n
When is the next Reserve Bank meeting?<\/p>\n
Today may be the first Tuesday of the month (the year, in fact), but the RBA board isn’t meeting today.<\/p>\n
First Tuesdays aren’t really a sure thing when it comes to the central bank anymore, with this being the third year of the RBA’s reduced meeting schedule.<\/p>\n
The first RBA monetary policy board meeting of the year will kick off on Monday, February 2, and conclude on Tuesday, February 3, with the interest rate decision announced at 2:30pm AEDT.<\/p>\n
The cash rate sits at 3.6 per cent, where it has been since the RBA delivered its last rate cut in August 2025.<\/p>\n
Will there be a rate hike or a rate cut?<\/p>\n
It’s always unwise to speculate with too much confidence, particularly a day ahead of some crucial inflation figures.<\/p>\n
But markets like to do just that, and based on current market pricing, the answer is no change to rates next month.<\/p>\n
According to data from Bloomberg, there’s around a 34 per cent chance of a hike in February \u2014 so the market sees the cash rate remaining steady at 3.6 per cent as the most likely outcome next month.<\/p>\n
By June, market pricing puts the chance of a rate hike at 93 per cent, and by August, a 0.25 percentage point hike is fully priced in.<\/p>\n
<\/p>\n
The RBA will meet eight times in 2026, beginning in the first week of February. (AAP: Joel Carrett)<\/p>\n
As for those paid the big bucks to forecast this kind of thing, the major bank economists are either expecting rate hikes starting in February or an extended hold.<\/p>\n
NAB has pencilled in two 0.25 percentage point hikes, in February and May, while the CBA has forecast one hike in February.<\/p>\n
Westpac and ANZ economists see an extended period of rates on hold, although ANZ does note a risk of a hike in early 2026, and Westpac sees risks on both sides.<\/p>\n
What data is the RBA watching?<\/p>\n
Inflation is the main game for the RBA, as maintaining price stability is central to its mandate<\/a>, alongside full employment (which it defines as the current maximum level of employment that is consistent with low and stable inflation).<\/p>\n The central bank targets consumer price inflation between 2 and 3 per cent and uses data released by the ABS to track its progress.<\/p>\n “High inflation hurts everyone” was a refrain of the governor as the RBA raised rates through 2022 and 2023 in an effort to get price rises back under control.<\/p>\n In December, after delivering what was viewed as a hawkish hold \u2014 that is, keeping the cash rate steady but putting a potential hike firmly on the table \u2014 Ms Bullock said the RBA would be watching incoming inflation data<\/a> to determine if inflation pressures were persistent or temporary.<\/p>\n “If inflation continues to be persistent and looks like it is not coming back down towards the target, then I think that does raise questions about how tight financial conditions are and the board might have to consider whether or not it’s appropriate to keep interest rates where they are or in fact at some point raise them,” she said.<\/p>\n Loading…<\/p>\n Ms Bullock didn’t put a timeline on when the RBA might be satisfied it had seen enough data to make a call on inflation, saying it will be a “meeting-by-meeting decision”.<\/p>\n The ABS will release the monthly consumer price index (CPI) for November tomorrow, Wednesday, January 7.<\/p>\n The December CPI will be released at the end of the month on Wednesday, January 28.<\/p>\n As for employment data, labour force figures for December are due on Thursday, January 22.<\/p>\n
![\"a](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/01\/7fae4d5f675a7199440ff7070613a720.jpeg\")
<\/p>\n