Economists see RBA holding rates steady

Central bank building exterior as economists expect RBA interest rates to remain on hold

Key Points

01Economists broadly expect the Reserve Bank of Australia to leave rates unchanged at its next meeting
02NAB’s Taylor Nugent says another rate rise in 2026 is not anticipated
03ANZ projects trimmed mean inflation of 3.7% year-on-year, slightly below the RBA’s forecast
04Upcoming Q2 CPI data and a speech by governor Michele Bullock are key to the policy outlook

RBA expected to keep rates on hold

Economists widely expect the Reserve Bank of Australia to leave interest rates unchanged at its upcoming policy meeting. The expectation of a hold comes after a series of earlier rate hikes in this cycle, which are already weighing on households and businesses through higher borrowing costs.

These earlier increases are a key consideration for analysts assessing whether the economy can absorb any additional tightening. With policy already restrictive, many see limited justification for near-term moves absent a significant surprise in the data.

Inflation data in focus

The Australian Bureau of Statistics is scheduled to release second-quarter consumer price index figures on Wednesday. This CPI data is a central input for policymakers and markets in judging how quickly inflation is easing toward the central bank’s target.

ANZ research forecasts trimmed mean inflation at 3.7% year-on-year for the quarter. This projection is described as slightly below the Reserve Bank’s own forecast, suggesting some scope for inflation to be tracking a bit better than previously anticipated.

Guidance from RBA leadership

Reserve Bank governor Michele Bullock is due to speak in Sydney on Tuesday. Her remarks are being closely watched for any clues about how the bank plans to manage remaining inflation risks while balancing growth and financial stability considerations.

Markets are looking to this speech for signals on the likely path of policy after the upcoming meeting. Any comments on the inflation outlook or on the impact of prior rate hikes could influence expectations for future decisions.

Economists’ medium-term outlook

NAB senior economist Taylor Nugent has said that NAB does not believe another rate rise is likely in 2026. This view points to an expectation that current policy settings, combined with slowing price pressures, may be sufficient to guide inflation lower over time.

Together, expectations for a near-term hold, forecasts of slightly softer underlying inflation, and cautious guidance from the RBA underscore a data-dependent stance. The upcoming CPI release and the governor’s speech are therefore seen as pivotal for confirming whether this steady policy path will persist.

Key Takeaways

01The policy outlook is increasingly shaped by evidence that earlier rate hikes are already restraining the economy, reducing pressure for further immediate tightening.
02Forecasts of trimmed mean inflation slightly below the RBA’s own expectations point to a modestly more favorable inflation backdrop than previously assumed.
03NAB’s view that no additional rate rise is likely in 2026 suggests expectations for a prolonged period of stable policy rather than renewed aggressive tightening.
04Upcoming Q2 CPI data and Michele Bullock’s speech have become key milestones that could adjust, confirm, or challenge current market assumptions about the RBA’s next moves.

References