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RBA's Next Move: February Hike Predicted
14 Jan
Summary
- Commonwealth Bank predicts a February 2026 rate hike.
- Softer wage growth is unlikely to deter the RBA.
- A 0.25-point hike could add $90 to monthly mortgage payments.
Commonwealth Bank has held firm in its forecast of a February 2026 interest rate hike, indicating that a slight decrease in wage growth is insufficient reason for the Reserve Bank of Australia (RBA) to alter its plans. The bank's latest report suggests the cash rate will likely reach 3.85% in February 2026 and remain there, despite annual wage growth easing to 3.1% in November.
This predicted rate increase carries significant implications for mortgage holders. Canstar analysis indicates that a 0.25-point rise could increase monthly repayments by approximately $90 for a $600,000 loan, with larger mortgages facing even greater increases. While headline inflation softened in November to 3.4%, economists caution that it remains above the RBA's target, making further action probable.
Commonwealth Bank's head of Australian economics, Belinda Allen, emphasized that the outcome of the Q4 25 Consumer Price Index (CPI) data, due January 28, will be crucial. The ongoing elevated trimmed mean inflation suggests current cash rate settings may not be enough to return inflation to the RBA's 2.5% target. Borrowers are advised to prepare their budgets for potential repayment increases.
