Did the RBA cut interest rates today? December 2025 announcement

A rate rise is now as likely as a cut in 2026, some economists say, after the Reserve Bank of Australia (RBA) held the cash rate at 3.60 per cent at its December meeting.

Australia’s inflation continues to be sticky and beyond the RBA target band, Domain chief of research and economics Dr Nicola Powell says.

“It absolutely dashed the hopes of a [further] rate cut in the December board meeting,” she says. “Their first board meeting of 2026 is probably also not going to deliver a rate cut.”

Experts say there will be little relief in sight in the coming months, with most factoring in a long period of holds or even a previously unthought-of rise.

Peter Tulip, chief economist at the Centre for Independent Studies, says the potential for a hike has been added to the mix after two back-to-back increases in inflation figures caught experts by surprise.

“A hike is as likely as a cut [in 2026],” he says. “It’s a 50-50 chance.”

If inflation cools, it’s likely we will see a rate cut, but if it remains at current levels or increases further, the RBA is more likely to increase rates, Tulip says.

The RBA’s monetary policy statement says, “Some of the recent increase in underlying inflation was due to temporary factors, and there is uncertainty about how much signal to take from the monthly CPI data, given it is a new data series.

“Nevertheless, the data do suggest some signs of a more broadly based pick-up in inflation, part of which may be persistent and will bear close monitoring.”

Graham Cooke, head of consumer research at Finder, says Australia’s economists are sending a clear message: don’t expect rate relief anytime soon.

“A hold is still a better outcome than an end-of-year hike, which was being suggested by some analysts – and would have added extra pressure to already stretched household budgets,” he says.

Private Sale $649,000

3/12 McNamara Street, Macleod VIC 3085

2

2

1

View property

Monetary policy predictions

All major banks except Westpac are forecasting an extended hold on the official cash rate in 2026.

“The February RBA meeting could see the board having to expand their consideration from just cuts or holds to include all policy options,” says Belinda Allen, head of Australian economics at CBA.

The bank maintains its prediction of no cuts in the foreseeable future, but adds that rate rises are likely if there are more surprise inflation surges and unemployment levels remain low.

Westpac remains firm in its forecast of cuts in May and August 2026, predicting the cash rate will drop to 3.1 per cent despite the higher inflation figures.

“While the October CPI surprised the market, it didn’t surprise us,” says Westpac senior economist Justin Smirk.

“As such, we see little reason to change our inflation forecasts and therefore no reason to change our views that the RBA will be cutting interest rates next year.”

Powell says property prices will continue to rise every quarter as buyers take advantage of steadying interest rates.

“We’re still very firm that the after-effects of three rate cuts, as well as policy support for first-home buyers, are going to continue to provide momentum to price growth in the first half of 2026,” she says. 

“What we’ll start to see over the second half is that affordability will cap those price gains, and that may be even more apparent if we see a year of the RBA holding the cash rate and not providing another rate reduction.”

Ray White Group chief economist Nerida Conisbee agrees, saying different factors are impacting property prices. 

“Australia’s housing market continues to be supported by strong fundamentals: rising population, persistent undersupply and constrained construction pipelines,” she says.

“Those conditions point to ongoing upward pressure on rents and prices, even as higher borrowing costs limit purchase capacity for some buyers.”

The new Australian Government 5% Deposit Scheme and the Help to Buy Scheme are expected to fuel property prices further, says LJ Hooker Group head of research Mathew Tiller.

“We still need the government to continue to focus on delivering well-located, quality new homes where people want to live,” he says.

When will interest rates go down?

The chances of a potential rate cut are dim for Australian mortgage holders and buyers, and Tiller says 3.6 per cent is likely the lowest the cash rate will be for a while.

“We’re probably close to the bottom of the cycle,” he says. “There may be one more cut next year, but more likely than not, we’re going to be on hold.”

Auction

31 Sirocco Street, Jamboree Heights QLD 4074

5

3

2

View property

Will interest rates go up in 2026?

Cash rate hikes could be possible next year, with 29 per cent of Finder’s expert panel suggesting a “likelihood of a rate hike within the next year”.

 Twenty-eight per cent say “the CPI increases the chance of a hike by as much as 50 per cent”.

For Sale $3.1m

15 Wood Street, Eastwood NSW 2122

6

3

2

View property

However, Powell says a rate rise will occur only if inflation accelerates rapidly.

“That is when we could start to see the RBA move with a rate hike,” she says. “But as it stands today, I cannot envisage that occurring.”

When is the next RBA interest rate decision?

The next Reserve Bank meeting announcing the first cash rate decision for 2026 is Tuesday, February 3.