Economists see 25bp rise this week and little prospect of cuts this year
A sharper-than-expected rise in inflation has led to widespread expectations that the Reserve Bank of Australia will lift the cash rate at its meeting tomorrow, prompting mortgage holders to prepare for higher repayments..
In the latest Finder RBA Cash Rate Survey, 33 economists and market commentators were asked for their views on the path of monetary policy and broader economic conditions. A narrow majority of panellists (52%) expect the RBA to increase the cash rate by 25 basis points to 3.85% this week.
When Finder last canvassed experts in December, only 9% thought a February rise was likely, underscoring how quickly sentiment has shifted.
“With rising inflation proving more stubborn than the RBA anticipated, most economists and the big four banks now expect a rate hike,” said Graham Cooke (pictured right), head of consumer research at Finder. “This news will feel like a cold shower for homeowners after a brief reprieve.
“Many who refinanced or entered the market during the 2025 easing cycle may feel blindsided, as the pivot from falling to rising rates in just six months has created significant whiplash.”
For borrowers, the repricing is material. On an average home loan of $693,802, a 25-basis-point increase would add an estimated $1,313 a year to repayments. For a $1 million mortgage, annual interest costs would rise by about $1,893, or $158 per month.
Cooke said mortgage customers should reassess their current products in light of the changing cycle.
“We’ve seen lenders slowly raise fixed rates over the past few months in anticipation of the winds changing,” Cooke said. “If your rate isn’t one of the best, now might be a good time to give yourself a rate cut. Many banks will also throw in some cash for your trouble.”
Survey respondents were also asked about the chances of a rate cut in the next 12 months. More than four in five experts who answered this question (82%) judged a reduction to be unlikely, including 14% who saw no prospect of a cut at all.
Economists in the survey singled out four domestic forces as critical to the RBA’s decisions through 2026: persistent services inflation, the housing and rental shortage, weak productivity growth relative to wages, and elevated government spending. If these pressures fail to moderate, panellists warned that all three cash rate reductions delivered in 2025 could be unwound quickly, reversing much of the prior easing.
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