Interest rate forecast and predictions for 2026

What is happening with the cash rate?

Last year, variable rate borrowers were offered a measure of reprieve when the Reserve Bank of Australia cut the cash rate three times. After that came a series of hikes at the start of 2026, before the central bank held the rate steady at 4.35% at its meetings in June and August.

As a home loan borrower, you’d be forgiven for thinking that your rates are currently on a see-saw. So where to from here? Economists at the nation’s big four banks previously predicted that the hikes were behind us, but following concerning CPI data, the majority now believe we’ll see rates rise again.

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Will Australians see rate cuts in 2026?

Just a few weeks ago, economists at the nation’s big four banks all predicted that we’d seen the end of cash rate hikes for 2026, and they were unanimous in the opinion that we’d see cuts beginning in 2027. However, the latest CPI figures have thrown these predictions for a loop.

July data from the Australian Bureau of Statistics shows that headline inflation has slowed from 3.8% to 3.5%; still an easing, but inflation remains much higher than the 3.2% that economists had predicted.

More importantly, trimmed mean inflation, the figure that the RBA relies upon when making its cash rate calls, remained steady at 3.6%.

Both the headline and trimmed mean figures remain well outside the RBA’s target band of 2-3%, meaning that a cash rate hike this year is certainly not out of the question as a way for the central bank to tame inflation.

“The economic narrative has taken a U-turn in the space of just a couple of days,” said Canstar’s data insights director Sally Tindall, following the announcement of the July figures.

“Yes, annual headline inflation might have dropped in the latest data, however, this was because of a spike in electricity and travel prices from July last year, not from good progress we’ve made right now,” she said.

“Core inflation provides a clearer picture of the troubles in the figures. In the last eight rounds of monthly data the annual figure has not gone down. Not once.”

“The Board signaled in its latest minutes that it wouldn’t hesitate to pull the trigger if upside risks materialised,” she continued. Ms Tindall added that, based on the most recent inflation data, it’s clear the nation’s biggest banks are starting to se the risks “coming home to roost.”

All eyes will be on the RBA for the next cash rate call on September 29.

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 throughout 2026 and into 2027:

• ANZ predicts a 25 basis point hike in November 2026, bringing the cash rate to 4.60%.
• CommBank predicts a 25 basis point hike in November 2026, bringing the cash rate to 4.60%.
• NAB predicts a 25 basis point hike in September 2026, with the risk of another in November. If the first of these hikes comes to pass, it would bring the cash rate to 4.60%.
• Westpac still predicts that we’ll see 25 basis point cuts in August and December of 2027, bringing the cash rate to 3.85% by the end of next year.

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 September 29 at 2.30pm.

Will interest rates rise again in 2026?

One of the RBA’s key mandates is to keep inflation in line in the economy, and given recent developments, a hike now seems like a real possibility.

During a recent speech at an Anika Foundation fundraiser in Sydney, RBA chief Michele Bullock said “the board is prepared to act as required to achieve its mandate, including by increasing the cash rate further if needed.”

If the bank’s board does decide to move rates up, then the cash rate would be pushed to a 15-year high; the last time rates soared to this level was in late 2011.

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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