RBA Signals Possible March Rate Hike as Inflation Risks Persist
The RBA might implement a rate hike sooner than most investors had expected as inflation has been persistent in early 2026.
Australia’s top central banker has indicated that an interest rate increase could happen as soon as this month if inflation expectations start to rise.
Reserve Bank of Australia Governor Michele Bullock spoke at a business conference in Sydney and said every policy meeting is now open to action because inflation is still high at 3.8% and unemployment remains low at 4.1%.
Financial markets had mostly expected that the central bank would wait for the first quarter inflation figures which will be released on April 29 before making any decision at the May 5 board meeting.
Bullock pushed back against that view because she is concerned that inflation expectations could become unanchored. She also referred to possible supply shocks from the Middle East conflict and existing price pressures which call for caution.
After her remarks, three-year Australian government bond yields rose 13 basis points to 4.313% which showed that investors quickly revised their outlook.
Markets now assign about a 30% probability to a rate hike at the March 17 meeting.
Investors are also fully pricing in a move by May with nearly a 75% chance that rates reach 4.35% by year end.
Focus has now shifted to the fourth quarter GDP report which will be released on Wednesday because it may further influence market expectations.
Earlier projections suggested quarterly growth of 0.6% but new trade and public spending figures indicate the economy may have grown closer to 1%.
Economists at Commonwealth Bank and National Australia Bank now expect growth of around 1% for the quarter while Westpac forecasts a stronger 1.1% which implies the economy is operating above its estimated potential and helps explain why inflation has remained persistent into early 2026.
(Source: Reuters)
Get Your Free Report on Top 5 ASX Stocks on WhatsApp
Instant Access. No Credit Card Required.
Receive on WhatsApp
Checkout Our Recommendation for free - 7 days free trial
Start Free TrialASX Stock Research & Recommendations — 7‑day free trial
Independent, analyst‑driven insights.
- Stock of the week report
- Daily Analysis Report
- No credit card required
Get Your FREE Report
Discover the Top ASX Stocks to Invest In 2026!
Expert Analysis of Top-Performing ASX Stocks
Market Insights and In-Depth Research
Buy, Sell, And Hold Recommendations
Almost There!
Enter your details to download the report
Success!
Preparing your download...
Latest Article
Disclaimer
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.
