{"id":309227,"date":"2026-02-25T09:35:08","date_gmt":"2026-02-25T09:35:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/309227\/"},"modified":"2026-02-25T09:35:08","modified_gmt":"2026-02-25T09:35:08","slug":"reserve-bank-could-hike-cash-rate-twice-in-2026-as-australias-inflation-stays-stubbornly-high-reserve-bank-of-australia","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/309227\/","title":{"rendered":"Reserve Bank could hike cash rate twice in 2026 as Australia\u2019s inflation stays stubbornly high | Reserve Bank of Australia"},"content":{"rendered":"

The Reserve Bank is more likely to hike rates again, and potentially twice before the end of the year, after new figures revealed inflationary pressures<\/a> showed no signs of easing in 2026.<\/p>\n

Annual inflation stayed at a high 3.8% in January, as the end of government subsidies drove electricity costs up by 19% in the month and left power bills nearly a third higher than they were a year earlier.<\/p>\n

The whiplash caused by the end of the federal and state electricity rebates has largely explained the doubling in the headline rate of inflation in just over six months.<\/p>\n

Electricity bills per quarter <\/a><\/p>\n

Even after removing these wild swings in prices, however, the latest Australian Bureau of Statistics figures showed the central bank\u2019s preferred measure of underlying inflation climbed to 3.4% in the year to January, from 3.3% in the month before.<\/p>\n

With the May budget looming as a major test for the Albanese government\u2019s economic credentials, Jim Chalmers<\/a> on Wednesday acknowledged that \u201cinflation is higher than we\u2019d like and for longer than we\u2019d like\u201d.<\/p>\n

\u201cWe know that these sorts of numbers are difficult news for people who are under pressure,\u201d the treasurer said.<\/p>\n

\u201cThat\u2019s why a big focus of the budget will be inflation, but also productivity \u2026 against the backdrop of this global economic uncertainty.\u201d<\/p>\n

Sign up: AU Breaking News email<\/a><\/p>\n

Inflation remains strong in areas many Australian households will struggle to avoid.<\/p>\n

The ABS figures showed climbing prices for essentials, including a 3.9% rise in rents and a 4.2% jump in medical and hospital services in the year to January.<\/p>\n

Already high construction costs continued to climb at a rapid pace, with home building inflation accelerating to 3.5%, from 3% in December.<\/p>\n

Stephen Smith, a partner at Deloitte Access Economics, said the ongoing price pressures were \u201cthe political payback of a populist policy\u201d by federal and state governments to subsidise energy prices from mid-2023.<\/p>\n

The ongoing strength in consumer price growth \u201cmeans a pre-budget rate rise<\/a> remains on the table\u201d.<\/p>\n

Smith said the combination of relatively soft growth and high inflation were a hallmark of an economy struggling with low productivity growth, and highlighted the urgency of the reform challenge.<\/p>\n

\u201cUnless the federal budget meets the moment and outlines significant economic and tax reform, growth will stagnate and inflation will persist for longer than necessary.\u201d<\/p>\n

Jo Masters, the chief economist at investment bank Barrenjoey, said there were \u201cwarning signals\u201d that inflation would prove more persistent than feared, and pencilled in a rate hike in August, on top of an existing call for a move in May.<\/p>\n

That would entirely reverse the monetary policy relief<\/a> the RBA delivered in 2025 and return the cash rate to its previous peak of 4.35%.<\/p>\n

An unemployment rate at a low 4.1%, accelerating domestic demand, high labour costs in the context of low productivity, and evidence that the economy was running beyond its capacity was part of a \u201cbroader economic picture\u201d suggesting the central bank would need to hike rates more than previously thought.<\/p>\n

Analysts and investors remained relatively sanguine about a rate hike as soon as March.<\/p>\n

Financial markets have upped their bets on a May rate hike to 95%, from 84% immediately before the ABS data, according to NAB.<\/p>\n

The chance of a second rate hike before the end of the year climbed from about 40%, to 60%.<\/p>\n","protected":false},"excerpt":{"rendered":"The Reserve Bank is more likely to hike rates again, and potentially twice before the end of the…\n","protected":false},"author":2,"featured_media":309228,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46],"class_list":["post-309227","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-il","tag-israel"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/309227","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=309227"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/309227\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/309228"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=309227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=309227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=309227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}