Stakes continue to rise ahead of the Reserve Bank of Australia's (RBA) first meeting of 2026. The nation's central bank meets the 2 and 3 of February for the much-awaited meeting on monetary policy.
Three rate cuts in 2025 brought the official cash rate (OCR) down to 3.60%. Yet mortgage holders and investors nationwide are still hoping for some added relief amid persistently high living costs and surging property prices. But as inflationary pressures continue to build and the labor market remains tight, concerns are surfacing that price growth may stay elevated for longer.
Against this backdrop, sentiment across financial markets has shifted markedly. What was once seen as a likely pause is now increasingly viewed as a near-term rate hike, as policymakers face mounting pressure to act decisively.
In a two-part series, Australian Broker spoke with a few key market players to gauge how expectations are evolving and what they believe the RBA’s next move will be.
Head of Australian Economics at Commonwealth Bank of Australia (CBA)
"We expect the cash rate to be increased by 25 basis points to 3.85%. The accumulation of evidence supports our view that a cash rate hike is needed to ensure inflation returns to the mid‑point of the target band by end 2027. We are still of the view that the economy only needs some fine tuning in the form of one rate hike. Persistent inflation remains too high but is not accelerating further."
Chief economist at Westpac Group
"When the economy is close to full employment and full capacity utilisation, it is hard to know which side of the line it is on. Inflation outcomes are the best guide in this situation. With trimmed mean as the clearest signal of the underlying inflation trend …. implies that the RBA is likely to raise rates at the February meeting."
Founder, director and broker at New South Wales-based Birdie Wealth
"Right now, the most likely move from the RBA is to hold. Inflation is [too high] for the RBA to feel relaxed. At the same time, people are already feeling the pressure from higher repayments and everyday costs. Cutting rates too soon could push prices back up. Raising rates again could make things harder than they already are. Holding gives the RBA time to see how things settle. In the short term, that means borrowing stays expensive. Buyers stay cautious. Some properties still perform well, but there is no broad rush or boom.
"The bigger point is you should not base a property decision on what the RBA might do next month. A home loan is up to a 30-year commitment. Trying to time one or two rate changes rarely makes a meaningful difference over that period. What matters far more is your own position. Can you afford the loan comfortably today? Do you have a buffer if rates stay higher for longer? Would you still sleep well if repayments moved up again? If the answer to those questions is yes, short-term rate noise matters a lot less. If the answer is no, waiting for a rate cut will not fix the underlying issue. The strongest buyers are not the ones who guess rates correctly. They are the ones who plan conservatively and give themselves room to breathe."
Chief executive officer at Rate Money
"Interest rates are unlikely to rise next month because the conditions that previously justified tightening have clearly eased. Economic momentum is also slowing in a meaningful way. Consumer spending has weakened, business confidence is subdued, and higher borrowing costs are already placing pressure on households. Another rate hike would risk unnecessary economic damage at a time when demand is already cooling. Policymakers are acutely aware that monetary policy operates with a lag, and pushing rates higher now would increase the risk of overshooting.
"Labour market pressures are moderating as well. While employment remains solid, wage growth is no longer accelerating, reducing the risk of a wage-price spiral. This removes a key argument for additional tightening in the short term. Holding rates steady is the prudent, responsible decision while policymakers assess the full impact of previous hikes."
General manager at aggregator Specialist Finance Group (SFG)
"With the way the RBA has been going recently, they hold when they should drop, they drop after they should have dropped, and now we are talking about a lift after a seasonal period where people usually spend more money, (during Christmas), a rate increase will now penalise [people] for a past market condition. Whilst inflation is tacky and employment numbers haven’t helped, the board will be looking at a hold or an increase. I’m on the fence with what they will do. But every experience and conversation I am having in the real world tells me that they should be cutting."
Head of Australian Economics at ANZ
"We now expect the RBA to raise interest rates by 25 basis points. In the wake of an interest rate increase we would anticipate material softening in leading indicators of activity such as auction clearance rates, consumer sentiment and business conditions [and] confidence. That will weaken the activity case for further rate rises beyond the one we expect. And while price pressures lifted through the second half of 2025, most top-down inflation indicators continue to suggest that a moderation of inflation back into the target range is likely over 2026 and into 2027."
Director and senior mortgage broker at Flint Group's Brisbane office
"This is a big and finely-balanced decision. A hold would likely see the property market continue to run, as buyers gain confidence that rates have peaked. A rise could slow short- term momentum and introduce concern about further increases, which could dampen expectations for property growth heading into 2026. My short answer: a hold. But it is very close.
"I lean towards a hold because policy is already restrictive and working its way through the economy. Household pressure is high; spending is slowing. And the RBA knows the lag effects are still coming. Also, the RBA can afford to wait for another inflation read rather than risk overtightening now. A hold lets them keep a hawkish tone without actually pulling the trigger. That said, this is not a comfortable hold. If inflation surprises higher again, a hike is very much back on the table later in the year."
Chief distribution officer at Liberty Financial
"It's likely the RBA will hold rates in February. For brokers and borrowers, a hold would create opportunity, giving customers breathing room to review their position, manage cash flow and plan ahead. Whether rates stay where they are or move later in the year, proactive conversations and flexible solutions will be key to helping clients navigate what remains a dynamic market.”
Founder and managing director at FinStreet
"While markets continue to debate the timing of potential rate cuts, I don’t expect meaningful rate reductions in 2026. At this early stage of the year, my view is that the RBA is more likely to hold rates at its February meeting, using the first part of Q1 to assess incoming inflation, labour market and consumption data before making any adjustments later in the year.
At the same time, whether rates move higher from here remains uncertain, as the current environment is quite complex, balancing easing inflation pressures against still-tight labour conditions and global uncertainties. One important dynamic we’re already seeing is that banks are beginning to change gear ahead of the RBA, particularly in how they price longer-term risk. Recent movements in fixed rates suggest lenders are becoming more cautious and are repositioning for a scenario where rates stay higher for longer, rather than move sharply lower.
In the near term, this is likely to reinforce a more selective and cautious market environment, with borrowers, investors and lenders all placing greater emphasis on cash-flow resilience and structure, rather than purely directional rate expectations."
