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Michele Bullock will deliver the RBA’s cash rate decision this afternoon. Picture: Getty Images<\/p>\n
Big banks interest rates predictions<\/p>\n
1:29pm<\/p>\n
While the big four banks are often aligned when it comes to rates expectations, the lead up to today\u2019s decision as spurred some varied forecasting paths.<\/p>\n
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.<\/p>\n
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.<\/p>\n
Westpac and ANZ had been presenting a more dovish view on the bank\u2019s trajectory, with both forecasting a rate hold up until the release of the December inflation data last week.<\/p>\n
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.<\/p>\n
Home prices up in January<\/p>\n
1:17pm<\/p>\n
National home prices continued to rise in January<\/a>, 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.<\/p>\n 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\u2019s most expensive city, Sydney, saw a slight 0.1% increase.<\/p>\n \u201cJanuary is a relatively quiet month for housing markets, with lighter sales volumes, which makes it harder to assess the momentum in home prices,\u201d REA Group executive manager of economics Angus Moore said.<\/p>\n \u201cHome prices are still likely to head to new highs in 2026, but at a slower pace of growth than in 2025.\u201d<\/p>\n Read more: Home prices hit new peak as expert warns affordability will not improve<\/a><\/p>\n Interest rate hike prediction<\/p>\n 1:03pm<\/p>\n 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%.<\/p>\n Underlying price pressures are also still present in the market. While headline inflation may fall, core inflation may remain \u2018sticky\u2019, meaning the bank is likely to tighten policy until there is proof of sustained cooling.<\/p>\n 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.<\/p>\n The domestic economy\u2019s bounce back from its sluggish progress mid last year could also prompt a rate rise.\u00a0 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.<\/p>\n Inflation on the up as rate hike looms<\/p>\n 12:47pm<\/p>\n 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.<\/p>\n 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.<\/p>\n 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.<\/p>\n MonthHeadline CPI (%)Trimmed mean (%)Dec 20253.83.3Nov 20253.43.2Oct 20253.83.3Sep 20253.63.2Aug 20253.23.0Jul 20253.03.0Markets pricing in an interest rate hike<\/p>\n 12:29pm<\/p>\n The latest data from the Australian Stock Exchange shows that market expectations for an interest rate rise are currently sitting at 72%.<\/p>\n It\u2019s 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%.<\/p>\n The RBA Rate Indicator calculates the probability of a rate change using market-determined pricing from the ASX 30-Day Interbank Cash Rate Futures.<\/p>\n RBA\u2019s first meeting for 2026<\/p>\n 12:16pm<\/p>\n Today\u2019s 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<\/a> after a four-year dry spell.<\/p>\n The last time the RBA increased interest rates was all the way back November 2023 \u2013 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.<\/p>\n The bank\u2019s careful stepping stone approach to easing throughout 2025 saw it intersperse each cut with a \u2018hold\u2019 decision. This was part of its well-documented narrow path policy approach to ensure a \u2018soft landing\u2019 \u2013 a phrase use to describe the hope the bank could bring inflation back down into target without kicking off a recession.<\/p>\n This caution worked well for the bank until October, when it\u2019s forecasting failed to account for a new inflation spike.<\/p>\n Welcome to our live coverage of the first cash rate decision of 2026<\/p>\n 12:01pm<\/p>\n Welcome to our live blog. We will be here all afternoon throughout the lead up to the Reserve Bank of Australia\u2019s (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.<\/p>\n The RBA held rates steady in December<\/a>, 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> \u2014 a far cry from the picture we\u2019re facing now.<\/p>\n In hard news for mortgage holders, most analysts expect the RBA to hike rates today<\/a>, while borrowing costs are unlikely to drop while inflation remains stubborn.<\/p>\n Stay around for our updates and the latest insights for homeowners, borrowers and savers, as well as for the RBA\u2019s afternoon press conference.<\/p>\n