The Reserve Bank is set to leave the cash rate at 4.35% next Tuesday, and for the rest of the year, according to ANZ.
However, the bank’s economic team has updated its cash rate forecast today and now expects two 0.25 percentage point RBA rate cuts in 2027, taking the cash rate to 3.85%. Previously, ANZ expected rates to remain on hold at 4.35% for a prolonged period.
CBA, NAB, and ANZ all expect the RBA to leave the cash rate unchanged for the rest of this year.
Westpac today reaffirmed it expects two further cash rate hikes in August and September this year, followed by cuts, but not until 2028.
Current big four bank | |||
|---|---|---|---|
Bank | June | Next | Forecast |
CBA | No | Cut | 2 cuts |
Westpac | No | Hike | 2 hikes |
NAB | No | Cut | 3 cuts |
ANZ | No | Cut | 2 cuts |
Impact of another 0.25 cash rate hike in 2026
While the chance of a further cash rate hike this year is reducing on the back of a slowing economy, borrowers should not rule it out.
For someone with a $600,000 mortgage and 25 years remaining at the start of the hikes this year, a 0.25 percentage point cash rate hike in August, as Westpac expects, would increase a borrower’s monthly repayments by $92.
Across what would then be four hikes for the year in February, March, May, and August, the total monthly increase would be $364.
Impact of a | ||
|---|---|---|
Loan size at | Hike in | Cumulative |
$600,000 | +$92 | +$364 |
$800,000 | +$122 | +$485 |
$1 million | +$153 | +$606 |
Source: Canstar. Notes: based on an owner-occupier paying principal and interest with 25 years remaining in Feb 2026 at the RBA avg variable rate. Assumes next rate hike falls in August in line with Westpac’s forecast. Calculations assume banks pass on the hikes the month after. Changes are to minimum repayments.
Banks are shifting their stances on the cash rate
Canstar's Data Insights Director, Sally Tindall, says, “The Reserve Bank is almost certain to leave the cash rate on hold next Tuesday for the first time in 2026.”
“ANZ is the final big four bank to shift its stance on the cash rate, moving from expecting an extended period of hold to now forecasting rate cuts on the horizon.
“The big four now all have pencilled in cash rate cuts, but they’re still a long way from singing from the same song sheet. Westpac still expects the RBA to hike rates twice more before Christmas.
“This divide highlights just how uncertain the economic outlook remains. Inflation is still well above the Reserve Bank’s target band and global tensions are still elevated, keeping the Board firmly in wait-and-see mode.
“If you’ve got a mortgage, make sure you’re still preparing for further hikes until inflation gets well and truly back into the highly evasive target band.”
