What to expect from the RBA in March 2026
Australia’s big four banks are now forecasting swifter action from the RBA, with hikes in both March and May 2026.
12 Mar 2026
Australia’s big four banks are now forecasting swifter action from the RBA, with hikes in both March and May 2026.
Last month, the Reserve Bank of Australia (RBA) raised the cash rate to 3.85% in response to inflation running higher than it’s comfortable with, among other factors. With economic conditions in Australia and around the world currently up in the air, Australia’s big four banks are now forecasting swifter action from the RBA, with hikes in both March and May 2026.
The latest Consumer Price Index (CPI) figures from the Australian Bureau of Statistics (ABS) shows trimmed mean inflation rose to an annual rate of 3.4% in January—above the RBA’s inflation target of between 2% and 3%.
While there are plenty of domestic economic factors influencing the RBA Monetary Policy Board (MPB), it remains to be seen exactly how external international factors—such as geopolitical instability and international conflict—could also affect Australia’s economy. Depending on how these play out, the MPB could be left with little choice but to tighten monetary policy ahead of schedule.
Canstar calculates how hard an extra rate hike could hit household budgets
Canstar analysis shows that if the RBA hikes rates in March and May 2026, an average mortgage holder’s monthly repayments could rise by $91:
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| Impact of three 0.25 rate hikes on monthly repayments | ||||
|---|---|---|---|---|
| Debt owning | Feb | March | May | Total |
| $600,000 | +$90 | +$91 | +$91 | +$272 |
| $800,000 | +$120 | +$121 | +$122 | +$363 |
| $1 million | +$150 | +$151 | +152 | +$453 |
Source: Canstar. Based on an owner-occupier paying principal & interest with 25 yrs remaining in Feb 2026 on the RBA av. variable rate. Calculations assume banks pass on the hikes the month after. Changes are to minimum repayments.
Canstar data insights director, Sally Tindall, Australia’s banks appear to be factoring a hike into their interest rates. Analysis of the Canstar database shows 26 lenders have moved 466 fixed rates in the past fortnight alone.
“Fixed rates are typically the early warning signal for where rates are headed. When they start creeping up before an RBA meeting it’s a sign lenders are pricing in a hike before it materialises.”
“The cash rate could well rise in coming weeks, but the fallout from the war, if it hits the Australian economy and jobs market hard, could also push the RBA into reverting back to cuts in the not too distant future.
“The door is closing on many of the competitive deals. Canstar data shows there are just 4 lenders still offering fixed rates under 5.40%. To put this into context, at the start of the year there were 62.
“That said, shopping around can still make a big difference, regardless of whether you decide to fix or stick with a variable rate.”
RBA governor says the March meeting is ‘live’; deputy wants to avoid ‘toxic’ inflation
Speaking at the Australian Financial Review Business Summit, RBA governor Michele Bullock rejected the idea that the RBA only seriously considers changing the cash rate at quarterly meetings when a full quarter of trimmed mean inflation data is available (the next release is scheduled for 29 April 2026), saying instead that “every meeting is live.”
“I’m not making a prediction about March, but it will be a live meeting. We have inflation at 3.8 per cent headline and we have unemployment at 4.1 tight. The Board will be actively looking at whether or not it needs to move more quickly. So I would discourage people from thinking that we necessarily only move every quarter.”
Speaking on The Conversation’s Politics With Michelle Grattan Podcast, RBA deputy governor, Andrew Hauser, said that the MPB has important data to process, and that there are risks on both sides to consider.
“If we fail to act decisively enough to prevent inflation staying high or even rising and expectations of inflation disanchor as they have not today in a long term sense. But if we do see that disanchoring, it will be bad for everyone and it’s worth us continuously reminding ourselves just how toxic inflation is. We’ve only just had an experience of that and we don’t want to go through that period again.”
ANZ tips March and May rate rises
While ANZ had previously predicted that the RBA would keep the cash rate on hold until May 2026, the potential inflation impact of the conflict in the Middle East has led ANZ to rethink its forecast. ANZ now foresees hikes in both March and May 2026 to bring the cash rate up to 4.35%, followed by an extended hold.
“With inflation above target and the RBA viewing the labour market as tight, the inflation risks are likely to be more central for the Board than risks around activity… The increased inflation risks will exacerbate those inflation concerns, creating more urgency to move quickly to contain inflation expectations.”
According to ANZ, the RBA will likely consider a 4.35% cash rate sufficiently restrictive to keep rates on hold for an extended pause while it assesses the impact on the economy.
Commonwealth Bank predicts RBA will hike in March and May after ‘lively debate’
As recently as two weeks ago, Commonwealth Bank economists had forecast the RBA would remain cautious and keep the cash rate on hold in March 2026, though they said it would be a “line ball” decision, dependent on data. Now, between offshore uncertainty and domestic pressures over these two weeks, the balance of probabilities has shifted and the Commonwealth Bank now expects the RBA to hike the cash rate in both March and May 2026.
“…with the world and inflation outlook moving rapidly there may be a preference to wait. But high frequency consumer inflation expectations are moving north and with an economy already running above capacity and inflation too high, this would be a concern for the Board.”
While Commonwealth Bank expects the MPB’s debate at the March meeting to be ‘lively, as it should be’, its forecast is for the Board to raise the cash rate in both March and May 2026, bringing the cash rate to 4.35%.
NAB foresees additional increase in face of inflation pressure
While NAB had previously forecast just one hike in May 2026, there was always a risk that the RBA would need to make an additional hike this cycle. Given a potential inflation shock coming from the conflict in the Middle East, NAB has formally updated its forecast to include hikes in March and May 2026, to bring the cash rate to 4.35%.
“Given the relatively unfavourable starting point for inflation in Australia and recent confirmation that the economy is running well above its trend rate of growth, the case for a near term rate hike is clear.”
Looking further ahead, NAB expects the RBA to keep the cash rate on hold at 4.35% until late 2027, with NAB economists ‘penciling in’ cuts in August 2027 and November 2027.
Westpac says a single hike is possible, but unlikely
Westpac economists have also updated their forecasts, predicting that the RBA will hike the cash rate in both March and May 2026. While Westpac expects the effect of higher oil prices on inflation to be large but temporary, it also expects the MPB will “nevertheless feel compelled to react.”
“There are good arguments for staying on hold until May given the temporary nature of the shock and the possibility of more extreme market instability. A split vote at next week’s meeting is possible. Market participants should allow for the possibility that the RBA opts to wait until May, but it is no longer our base case. Similarly, a swift and clear resolution of the war (and fall in oil prices) or a clear and sudden loss of momentum in domestic activity would mean that the expected March hike would not be followed up in May. Again, this is not our base case, but we will keep the possibility under review.”
Beyond May, Westpac anticipates that underlying inflation will be close to the RBA’s target midpoint by the end of next year, with rate cuts to come in November and December 2027, and February 2028.
This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.
- Canstar calculates how hard an extra rate hike could hit household budgets
- RBA governor says the March meeting is ‘live’; deputy wants to avoid ‘toxic’ inflation
- ANZ tips March and May rate rises
- Commonwealth Bank predicts RBA will hike in March and May after ‘lively debate’
- NAB foresees additional increase in face of inflation pressure
- Westpac says a single hike is possible, but unlikely
