On 3 February 2026, the board of Reserve Bank of Australia (RBA) has unanimously decided to increase the cash rate target by 25 basis points to 3.85 per cent.

RBA stated in its media release that ‘[w]hile inflation has fallen substantially … inflation is likely to remain above target for some time … [and while] [f]inancial conditions eased over 2025 … the effects of earlier interest rate reductions are yet to flow through fully to aggregate demand, prices and wages … [and] … recently, the exchange rate, money market interest rates and government bond yields have risen following a rise in market expectations for the cash rate. [Hence], [t]he Board judged that inflation is likely to remain above target for some time and it was appropriate to increase the cash rate target‘.

RBA ‘will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. [I]t will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market … [so as to achieve] price stability and full employment’ in the long term.

 

Author: Brian FANG, Partner, Commercial and Real Estate

 

Media release: https://www.rba.gov.au/media-releases/2026/mr-26-03.html