Interest rate forecast and predictions for 2026

What is happening with the cash rate?

After several years of steep hikes, and a year without movement in 2024, the central bank finally began lowering rates at the beginning of 2025, and has cut the cash rate a total of three times this year.

Economists at the nation’s big four banks had tentatively predicted a cut in November, but by the end of October, all had revised this prediction, and the RBA did indeed hold rates steady at 3.60% at its latest meeting.

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Will Australians see rate cuts in 2025?

In late October, the ABS released the CPI figures for the September quarter, with a sharp rise in quarterly inflation suggesting that a further rate cut in 2025 is going to be extremely unlikely.

Trimmed mean inflation, one of the RBA’s key metrics when considering whether to cut rates, jumped to 3.0%, the upper limit of the central bank’s target range, while headline inflation soared to 3.5% annually.

Analysing the figures, Canstar’s data insights director Sally Tindall said that “three months of higher-than-expected monthly inflation results rules out further cash rate cuts in 2025.”

What are the big four banks’ cash rate predictions?

Here’s what the major banks currently have to say about the RBA’s predicted movements for the remainder of 2025 and into 2026:

• ANZ predicts a 25 basis point cut in March 2026, taking the cash rate to 3.35%.
• CBA currently does not predict any further cuts.
• NAB predicts a 25 basis point cut in May of 2026, taking the cash rate to 3.35%.
• Westpac predicts 25 basis point cuts in May and August 2026, talking the cash rate to 3.10%.

Where the RBA board formerly met on the first Tuesday of each month, excluding January, it now meets eight times a year, for two days at a time. This means that the RBA’s next cash rate announcement is due on Tuesday December 9th at 2.30pm.

Will interest rates rise again in 2025?

At this stage, there are no predictions for any further cash rate movement in 2025, although the board of the RBA has the final call.

When making monetary policy, one of the RBA’s key goals is the maintenance of full employment in Australia, in order to maintain the overall strength of the nation’s financial system, and recent jobs figures have been strong.

Recent CPI figures show that trimmed mean inflation is sitting at the upper limit of the RBA’s target band, but it does not appear so high as yet that the RBA would justify a rate rise.

Will Trump’s tariffs affect interest rates in Australia?

While the affects of US president Donald Trump’s tariffs are ongoing on the world economy, the RBA’s board said earlier in the year that it had modelled the impact of ‘trade war’ and ‘trade peace’ scenarios.

In its May 2025 Statement on Monetary Policy, the board of the RBA said that “a slowing in global growth is expected to result in reduced demand for Australian exports and lower export prices, though these impacts will be mitigated by Chinese fiscal stimulus.”

Governor Michele Bullock said that the current situation for Australia “not just uncertain, it’s actually unpredictable” and so that the range of outcomes from an international trade war could be “quite wide.”

How can I compare home loans?

If you’re looking for a low fixed or variable rate for a new home loan or a refinance, you can compare home loans with Canstar to see if you can find a lender offering a deal that meets your needs and circumstances.

If you’re considering refinancing from a variable rate to a fixed one, it may also be worth considering the pros and cons of fixing your home loan, and considering the current interest rates on home loans to see how fixed and variable rate loans stack up. You might also want to consider some of the home loan refinancing deals that might be available.

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