Has the RBA Quietly Indicated Rate Cuts Are Over-and a New Cycle Is Beginning?
Source: Kapitales Research
Highlights:
The RBA held the cash rate at 3.6% at the time of writing, matching market expectations.
Stronger inflation and consumer spending have erased expectations of further cuts and boosted odds of a hike in 2026.
Governor Michele Bullock is expected to adopt a more hawkish stance in her upcoming media briefing.
RBA Keeps Cash Rate at 3.6% as Inflation Pressures Build
The Reserve Bank of Australia (RBA) has maintained the cash rate at 3.6 per cent, a decision that financial markets and economists had broadly expected. At the time of writing, the decision reflects a unanimous vote by the central bank’s board, following two consecutive inflation readings that came in above market forecasts and well outside the RBA’s target range. The central bank has already reduced rates three times this year, but the unexpected jump in inflation — paired with stronger consumer spending and improving economic momentum — has forced the market to reassess its expectations for monetary policy in 2026.
Markets Rapidly Reprice Expectations
Only weeks ago, investors were confident there was room for at least one more rate cut. But the inflation surprise has swiftly changed the outlook. Based on current market pricing, the likelihood of any further rate cuts in this cycle has now been largely priced out. Instead, traders are pricing in a 55% chance of a rate hike by May next year, with expectations firming for a move by August. Markets also assign a 50% probability of yet another increase in the second half of 2026, signalling a potential pivot to a tightening cycle much earlier than previously expected.
What Comes Next?
All eyes are now on RBA Governor Michele Bullock, who is scheduled to address the media at 3:30pm. Analysts expect a notably more hawkish tone, especially as the central bank seeks to reinforce its commitment to bringing inflation back within target.
Investors will be listening closely for clues on how persistent the RBA believes current price pressures are — and whether the economy is entering a phase where rate hikes become more likely than cuts.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
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Has the RBA Quietly Indicated Rate Cuts Are Over-and a New Cycle Is Beginning?
Highlights:
RBA Keeps Cash Rate at 3.6% as Inflation Pressures Build
The Reserve Bank of Australia (RBA) has maintained the cash rate at 3.6 per cent, a decision that financial markets and economists had broadly expected. At the time of writing, the decision reflects a unanimous vote by the central bank’s board, following two consecutive inflation readings that came in above market forecasts and well outside the RBA’s target range. The central bank has already reduced rates three times this year, but the unexpected jump in inflation — paired with stronger consumer spending and improving economic momentum — has forced the market to reassess its expectations for monetary policy in 2026.
Markets Rapidly Reprice Expectations
Only weeks ago, investors were confident there was room for at least one more rate cut. But the inflation surprise has swiftly changed the outlook. Based on current market pricing, the likelihood of any further rate cuts in this cycle has now been largely priced out. Instead, traders are pricing in a 55% chance of a rate hike by May next year, with expectations firming for a move by August. Markets also assign a 50% probability of yet another increase in the second half of 2026, signalling a potential pivot to a tightening cycle much earlier than previously expected.
What Comes Next?
All eyes are now on RBA Governor Michele Bullock, who is scheduled to address the media at 3:30pm. Analysts expect a notably more hawkish tone, especially as the central bank seeks to reinforce its commitment to bringing inflation back within target.
Investors will be listening closely for clues on how persistent the RBA believes current price pressures are — and whether the economy is entering a phase where rate hikes become more likely than cuts.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au