Interest rate forecast 2026: when will rates go up in Australia?
01 Sept 2026
The Reserve Bank of Australia (RBA) cut the cash rate three times last year, offering a measure of relief to variable rate home loan borrowers, but the cuts are officially over, following three rate rises in the first half of 2026.
At its June and August meetings, the board of the RBA held the cash rate steady at 4.35%, and as recently as the beginning of August, economists at the nation’s big four banks predicted that the central bank would hold there and begin cutting in 2027.
The July CPI figures threw these predictions for a loop, with headline inflation slowing from 3.8% to 3.5%, much higher than the 3.2% that economists had predicted. More importantly, trimmed mean inflation, the figure the RBA relies upon when making its cash rate calls, remained steady at 3.6%.
The bank’s board makes its next announcement on Tuesday September 29, and all eyes will be on them to see if they hike rates again, which at least one of the big four banks believes is a real possibility.
What do the major banks say about future cash rate hikes?
ANZ predicts a 25 basis point hike in November 2026, bringing the cash rate up to 4.60%.
CommBank predicts a 25 basis point hike in November 2026, bringing the cash rate up to 4.60%.
NAB predicts a 25 basis point hike in September 2026, with the risk of another in November. If the first of these hikes comes to pass, it would bring the cash rate to 4.60%.
Westpac still predicts 25 basis point cuts in August and December 2027, bringing the cash rate down to 3.85% by the end of next year.
Will rates rise in 2026?
When announcing the August cash rate hold, the RBA’s board stated very plainly that another hike is not out of the question this year.
In its August 11 statement, the board said that it remains “focused on its mandate to deliver price stability and full employment,” and “will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if upside risks materialise.”
Given the latest CPI announcement, it now seems a hike is a real prospect.
“The economic narrative has taken a U-turn in the space of just a couple of days,” said Canstar’s data insights director Sally Tindall, following the announcement of the July figures.
“Yes, annual headline inflation might have dropped in the latest data, however, this was because of a spike in electricity and travel prices from July last year, not from good progress we’ve made right now,” she said.
“Core inflation provides a clearer picture of the troubles in the figures. In the last eight rounds of monthly data the annual figure has not gone down. Not once.”
“The Board signaled in its latest minutes that it wouldn’t hesitate to pull the trigger if upside risks materialised,” she continued, adding that based on the most recent inflation data, it’s clear the nation’s biggest banks are starting to se the risks “coming home to roost.”
How to ease the pain on your mortgage
There are ways you may be able to pay off your home loan quicker than planned. For example, paying more than the minimum required, or switching from calendar monthly to fortnightly payments can help you reduce the outstanding amount on your loan faster.
If you’re worried about the impact of any rate rise on your home loan repayments, you might want to consider reviewing your loan. A good place to start is by researching what other rates and loans are on the market, via a comparison website such as Canstar.
Armed with this information, you may choose to discuss with your lender what options may be available, such as fixing all or part of your loan. If you’re in a position to do so, you could also consider asking them for a lower rate, citing examples of other rates on offer.
You may also want to consider switching lenders to take advantage of a more competitive deal, including any refinance offers. But refinancing could involve the payment of fees, so it’s a good idea to read all important documentation, such as the Target Market Determination (TMD) and Key Facts Sheet, before making a decision.
Of course, any rate rise, while bad news for mortgage and other loan customers, would be good news for savers.
Anyone with savings in an interest bearing account will likely be looking for greater return on their money but borrowers will be keen to keep their repayments low, and that’s the challenge the RBA faces every time it meets to consider changing the cash rate.
This article was reviewed by our Editor-in-Chief Nina Rinella before it was updated, as part of our fact-checking process.
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