Login
RBA hands down March rate decision
For the second time in 2026, the Reserve Bank of Australia (RBA) decided to hike the cash rate by 0.25 points to 4.10 per cent, costing the average borrower an extra $1,416 per year.
The RBA’s decision comes as little surprise amid ongoing tensions in the Middle East and concern that inflation has been more persistent than expected.
According to REA Group senior economist Eleanor Creagh, although inflation has eased from its peak, underlying price pressures remain above the Reserve Bank of Australia’s 2–3 per cent target.
She said that January data showed persistent trimmed-mean inflation and sticky housing and services costs, prompting the board to support a modest further policy tightening as unemployment stays low and economic activity remains resilient.
“Recent national accounts data showed the economy expanding by 2.6 per cent over the year to December, a pace that remains above the RBA’s estimate of sustainable growth.”
“While household spending growth has softened in recent months, it continues to expand overall, and the labour market remains resilient. In that environment, the RBA will be wary of declaring the inflation fight over too soon,” Creagh said.
PRD chief economist Dr Diaswati Mardiasmo said the RBA is taking a preventive approach rather than a reactive one, choosing not to wait for the March quarterly inflation reading.
“This is to try and protect the Australian economy from a higher inflation rate, which can happen due to the potential price increase in fuel and other goods and services," Mardiasmo told SPI.
However, she said that raising the cash rate to discourage spending and help control inflation could lead to reduced hours or layoffs, and to higher unemployment.
She added that in the housing market, today’s decision will limit the boost in borrowing capacity from 2025 rate cuts, with higher mortgage rates adding to affordability pressures and slowing price growth.
She said that, due to higher rates, potential buyers might be reluctant to enter the market, while sellers need to be smart in their campaigns, highlighting the unique features of their dwelling to remain the first choice.
“For both home owners and investors, it will impact monthly mortgage repayment, so revising the bank loan is definitely the advice.
“Refinancing is an option; however, do not rush, as there might be more cash rate increases in 2026. If you refinance, ensure you can lock in your rate.”
“Remember that sometimes there is an exit or transfer fee from your current bank, and a set-up fee from your potential new bank. Ensure you include this in your calculations on whether or not to refinance,” Mardiasmo concluded.
