RBA Raises Rates for The First Time since November 2023

bonkers22 on 03/02/2026 - 15:14

The RBA have announced a new cash target rate of 3.85%, an increase of 0.25%.

Inflation eased from its 2022 peak but rose again in late 2025. The Board sees this increase as partly driven by stronger-than-expected demand and rising capacity pressures, meaning inflation will likely stay above target for a while.

Private demand has accelerated, supported by higher household spending, investment, and a strengthening housing market. Financial conditions also eased through 2025, credit remains easily available, and earlier rate cuts are still flowing through. Recent rises in the exchange rate and market yields reflect expectations of higher interest rates.

Labour market conditions remain somewhat tight. Unemployment and underutilisation are low, and while Wage Price Index growth has eased, broader wage measures and unit labour costs remain elevated.

Uncertainty persists around the economic outlook and how restrictive monetary policy currently is. Stronger domestic demand or limited supply growth could intensify capacity pressures, though global conditions have so far had little negative impact on Australia.

The decision was unanimous. Can we expect subsequent hikes in the coming months, or will inflation cool…

Poll Options

  • 340
    There will be subsequent rate hikes
  • 72
    The rate will hold steady for a few months
  • 5
    The rate will drop in the next few months
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Comments

Search through all the comments in this post.
    • spiderext on 03/02/2026 - 15:41
      +25

      what a weird flex. but you do you

      • BobCobb on 05/02/2026 - 16:10
        +1

        You'll get there.

    • bonkers22 on 03/02/2026 - 15:42
      +31

      Lucky you. As a zoomer who bought a home just 4 months ago, my Ozbargain impulse purchase fund reduces further. In fact I need to unpin the tab…

      • tenpercent on 03/02/2026 - 19:40
        +24

        Just lift yourself up by your bootstraps, skip the smahed avo toast, and don't use air conditioning on 35C+ days. Luck of being born at a certain time and profiting from the largest and longest property boom the world has ever seen has nothing to do with jimbo's success. /s

        • S2 on 03/02/2026 - 20:21
          +2

          some seem to have missed the /s

      • JIMB0 on 03/02/2026 - 21:15
        -8

        Paying cash avoids all this drama. Something to consider next time, less stress and more options.

    • Jolakot on 03/02/2026 - 16:12
      +15

      spending even more money which is good for the economy

      What exactly do you think they're trying to fix by raising interest rates?

      • JIMB0 on 03/02/2026 - 16:37
        -7

        They use interest rates to control demand. This hike will cause a pullback in demand, so I’m doing my bit by increasing spending to help keep the economy ticking along. Might even pick up some good deals - who knows.

        • freefall101 on 03/02/2026 - 17:01
          +10

          The pullback in demand is the point. Reduced demand reduces inflation.

          Higher interest rates aren't just to discourage borrowing, it's also to encourage investment (because your returns are better). You're doing the opposite of what they want.

        • Jolakot on 03/02/2026 - 17:09
          +9

          You see a bloke sweeping leaves off of his driveway, he clearly wants less leaves in his driveway considering he's putting considerable effort into reducing the number of them.

          Are you doing your part by dumping your excess leaves into his driveway, in spite of what his goal is?

          • JIMB0 on 03/02/2026 - 17:24
            +6

            @Jolakot: More leaves in the driveway is good as it keeps him in a job and he can even work overtime to help pay the extra interest on his mortgage and car loan.

    • vorsprung on 03/02/2026 - 16:56
      +8

      Wanna fix my Tesla? Good for my economy.

      • brendanm on 03/02/2026 - 17:32
        -4

        Tesla's don't break

    • MrThing on 03/02/2026 - 17:58
      +2

      Cool story bro, enjoy your bullshit

    • rogerwilko on 04/02/2026 - 08:05
      +2

      Yeah, spend it before inflation makes it useless. I commend you for doing your bit for the economy.

    • ForkSnorter on 04/02/2026 - 09:11
      +1

      Australians, on average, have far more debt than savings. So overall, a rate rise is not good for the economy in the short term.

    • IpGem on 04/02/2026 - 11:45

      Okay Jimb000

    • butteroz on 04/02/2026 - 15:17
      +2

      Everyone getting ragebaited so hard without looking at your other comments lol

    • BobCobb on 05/02/2026 - 16:10

      Well said.

  • RichardL on 03/02/2026 - 15:25
    +4

    For reference, interest rate was 4.35% back in November 2023.

    3.85% is also the same rate as mid last year.

    • Wiadro on 03/02/2026 - 15:44
      +19

      we shouldnt have gone under 4% tbh

      • S2 on 03/02/2026 - 20:22
        -1

        genuinely, why?

        • Wiadro on 03/02/2026 - 20:44
          +6

          why coz we wouldnt need to be such a yoyo country

          • ForkSnorter on 04/02/2026 - 09:15
            +3

            @Wiadro: Yep. RBA is always running behind or overdoing it. There was no reason to lower the rates, neither in 2022, nor in 2020. All it did was inflate house prices so that when the rates were lifted again, all the new homeowners had to become frugal.

            RBA is playing a game of: 1. inflate house prices. 2. Then make home buyers suffer. 3. If house prices start stalling, lower rates to rev them up again.

      • drprox on 05/02/2026 - 12:42
        +1

        Totally agree and there wasn't a compelling reason at the time. I felt the RBA got bullied into a couple of the cuts.

  • MS Paint on 03/02/2026 - 15:28
    +32

    Compared to the last 30 years (excluding covid blip in data) 3.85% is still dirt cheap.

    • JIMB0 on 03/02/2026 - 15:31
      +8

      Yep, and I expect property prices to continue their march upwards.

      • Jaduqimon on 03/02/2026 - 15:33
        -2

        cmon dont be so humble. "you expect"… YOU KNOW! hehehe

    • gimmebubbletea on 03/02/2026 - 18:00
      +14

      yeah, if only property prices matched last 30 years' pricing too.

      • ssfps on 04/02/2026 - 02:58

        I don't think anybody wants 0.1% interest and 10 million dollar loans for a median house. Next step is billion dollar notes and new-shekels.

    • reactor-au on 04/02/2026 - 08:04
      +12

      The problem isn't the interest rate, the problem is the amount one needs to borrow to buy a damn house

      • coffeeinmyveins on 04/02/2026 - 12:32
        +3

        The problem is that wages haven't kept up with property prices. That's it. It's not interest rates at all.

    • aimon on 04/02/2026 - 17:35

      I am glad people like you exist. Interest rates are high. Mortgages are.

      • MS Paint on 04/02/2026 - 19:29

        Love you too. Cheers ♥️

        Interest rates are high.

        No they aren't.

        • aimon on 05/02/2026 - 19:24

          Sorry yes. My typo

          Interest rates aren't high. Mortgages are.

    • trapper on 06/02/2026 - 13:22

      Because inflation figures are completely faked now.

  • Jaduqimon on 03/02/2026 - 15:30
    +10

    should have just pumped it up by 100 bps. 25bps hardly moves the needle

  • darvian22 on 03/02/2026 - 15:32
    +12

    Nothing like 35% of the population doing all the heavy lifting…. such an outdated system

    • DingoBilly on 04/02/2026 - 00:28
      +6

      Yes, only home owners with mortgages are affected.

      Businesses never take loans or similar.

      Poor people with houses, need to take more tax from those without houses to make it fair. Bizarre logic.

    • frewer on 05/02/2026 - 17:11

      Yeah who's gonna pay for politician's retirement funds ? 400k isnt cheap

  • Nugs on 03/02/2026 - 15:34
    -1

    Thank fook
    Inflation hurts everyone (nearly)
    Interest rates hurt some
    .

  • plmko on 03/02/2026 - 15:39
    +6

    Rising interests is normal. If you bought a property you can afford then it's immaterial to your life.

    Rent however RIP to the people with out an exit. You can be sure landowners will add 5% to your rent.

    • brendanm on 03/02/2026 - 17:34
      -2

      No one cries when Coles passes along cost increases.

    • supersabroso on 04/02/2026 - 20:43

      Yep, everybody will be fine as Australia means tests everyone for an additional 3% interest hike. A 0.25% increase is chump change and it'll help slightly dim the huge riches that people have to spend on holidays, luxuries, brand new cars, eating out etc.

      I think the main benefit is that house prices will finally reduce a little instead of going to the moon, this was clearly unsustainable and depressing for the 33% of Australians that don't own a home yet.

  • Wiadro on 03/02/2026 - 15:41
    +7

    house prices still going up

  • jjjaar on 03/02/2026 - 15:45
    +2

    Anyone have a graph of discretionary spending plotted against home ownership type (mortgage / owned outright / renting)?

    • Jimothy Wongingtons on 03/02/2026 - 17:53
      +10

      The dream of home ownership is just so out of reach for most now - so not surprising to see discretionary spending go up

      • brendanm on 03/02/2026 - 18:13

        Would be pretty depressing. A family of lawyers who are partners in the firm can buy a standard house in the suburbs, and still have to only eat 2 minute noodles.

        • Wiadro on 03/02/2026 - 20:59

          just like their uni days

        • supersabroso on 05/02/2026 - 09:43

          That's just a complete lie as a family of lawyers can buy an extra investment property every few years whilst living in their brand new 5 bedroom, triple story house just 30 minutes from Sydney CBD. So many people pretending that home ownership is out of reach, yet 66% of Australians own their own home. 33% of us have always been renting, even 50 years ago when houses were cheap as chips. It just proves that no matter how cheap homes are, 33% of us will never have the mindset to buy a home.

          • brendanm on 05/02/2026 - 11:47
            +2

            @supersabroso: A) It was an exaggeration

            B) People that already owned a house can obviously buy another one. Entry into the market for new home buyers is far harder.

      • jjjaar on 04/02/2026 - 12:06
        +3

        The dream of home ownership is just so out of reach for most now - so not surprising to see discretionary spending go up

        Absolutely agree. My hypothesis is that those with a mortgage have the lowest amount of discretionary spending, then renters, then owned outright would be a lot higher than the others. I’d love to see the data.

        But would also like to see it plotted over time, along with average cost of rent to income ratio, as I wonder whether when rents just went nutso, that’s when their discretionary spending increased.

  • WoodYouLikeSomeCash on 03/02/2026 - 16:03
    -2

    Thanks a lot Labor!

    • Dunks on 03/02/2026 - 17:20
      +2

      Why are you negged? It's definitely Labor inflicted.

      Such die hard Labor fans here.

      Start with Labors energy prices, with the ending of their subsidies.

      • tenpercent on 03/02/2026 - 19:44

        Inflation is caused by 'money printing'. i.e. more money in the system chasing the same amount of stuff. The overwhelming majority of money creation occurs when private banks issue loans.

        • b0son on 03/02/2026 - 22:42
          +7

          isnt the government issuing $150bn in bonds this financial year? presumably to pay for the inflationary programs it introduced that it didn't correctly budget for.

          • tenpercent on 03/02/2026 - 23:40
            +2

            @b0son:

            isnt the government issuing $150bn in bonds this financial year?

            How much of that is just rolling over existing debt though? How much debt is maturing; more or less than the $150bm issuance?

            Government spending seems to be following roughly the same trend as the last 10 years.

            Government debt seems to be back to the pre-covid trend line too.

            Consumer credit expanded by $260bn in the 12 months to end of Dec 2025. https://tradingeconomics.com/australia/consumer-credit

            M3 increased by about $240bn in the 12 months to end of Dec 2025. https://tradingeconomics.com/australia/money-supply-m3

          • ssfps on 04/02/2026 - 03:01
            +2

            @b0son: That sounds normal, and yes it's (profanity).
            But isn't the new loan commitment for mortgages this financial year approx $400bn? If so, it means the government printing an insane amount of money is still only accounting for a bit more than a third of the inflation caused by bank mortgage loans, or a bit more than a quarter of our inflation excluding other sources of money printing.

        • Dunks on 04/02/2026 - 14:15

          High energy prices, are passed onto everyone and everything. This is on Labor.

          Want to buy food from a small business? Guess what his electricity went up. Why?

          Because of Labor and their policy.

          Reopen Coal, stop with this renewable energy garbage.

          • Koffee on 04/02/2026 - 14:34

            @Dunks: Worse than that, there was a perfectly good wind farm off bass strait proposed that would have supplied more energy than Victoria needed and covered over losing Coal, and the Federal Labor govt said NO

            • tenpercent on 04/02/2026 - 19:01
              -1

              @Koffee: Yeah why won't Labor just let us (profanity) the whales and the fisheries?
              /s

          • whatgift on 04/02/2026 - 21:39
            -1

            @Dunks: Except renewable energy is not the main cause of the increases - in fact it's a big reason they're not going up even further.

          • R4 on 05/02/2026 - 11:32
            +1

            @Dunks: Yep. We're digging up and exporting record amounts of coal but we can't use it here. Pathetic and economic insanity

        • Koffee on 04/02/2026 - 14:33

          Inflation is also caused by governments spending like wounded bulls. Ie the Victorian Government sponging up all the tradies and driving up the costs of construction.

        • WoodYouLikeSomeCash on 04/02/2026 - 16:12

          So you’re blaming the banks? 😂 Even the business leaders have said this is Labor’s fault.

  • Jolakot on 03/02/2026 - 16:28
    +3

    I wish they would increase GST rather than interest rates, seems like a much more efficient and fair way to cool down the economy.

    Because increasing changing interest rates just gives Pam & Bob who have a paid off house and money in the bank more disposable income to spend from interest.

    For every dollar they take out of the economy, surely they're adding a decent amount in from people with substantial savings getting more money for nothing.

    • gimmebubbletea on 03/02/2026 - 18:01
      +5

      RBA can't increase GST - that's a parliament/government thing.

      • Jolakot on 03/02/2026 - 18:20

        Yes, I wish they would increase GST rather than interest rates. Maybe when the RBA people run for office.

    • elgrande on 03/02/2026 - 19:50
      +6

      This is the right answer. Targeting mortgage holders only does not stop everyone from spending. This model is not fit for purpose as home ownership drops.

      The reality is that an alternate tax based model wouldnt help banks make profit though, which is what this is really about.

    • Koffee on 04/02/2026 - 14:36

      Would not impact on the boomers with no mortgage - they could still spend. Costs everywhere are going up and increasing a regressive consumption tax would be political suicide.

  • Dollar General on 03/02/2026 - 16:30

    Bitcoin fixes this……..somehow

    • butteroz on 04/02/2026 - 15:15

      Interesting how no one can explain the somehow

      • jaimex2 on 05/02/2026 - 11:37
        +1

        What do mean? It's pretty simple - it can't be printed on a whim.

      • bergensherper on 05/02/2026 - 14:08

        no one can explain the somehow

        Bitcoin is supposed to send us to the moon, and it's only on the moon that we can actually afford to buy a property.

  • Drakesy on 03/02/2026 - 16:31
    +1

    House price growth was record year on year…

    And only now the RBA raises the rates…

    Something tells me the RBA isn't running the economy, the banks and Real Estate industry is. Oh wait, they are…

    What happened during COVID, they watched the world's inflation take off like a rocket and waited, then Australia took off and they sat there watching until it hit 8%…

    • cloudy on 03/02/2026 - 16:42
      +3

      House price growth was record year on year…
      And only now the RBA raises the rates…

      nothing in their mandates mention house prices…

      • Drakesy on 03/02/2026 - 17:18

        House prices are very much the canary in the coal mine for how hot the economy is running.

        Its painstakingly obvious.

      • tenpercent on 03/02/2026 - 19:46
        +3

        Where do you think the majority of money creation (i.e. more money in the system chasing the same amount of stuff i.e. inflation) comes from in Australia? Mortgages.

        • cloudy on 03/02/2026 - 23:23
          -2

          I didn’t realise the average Joe blow going to a bank for a mortgage is creating money.

          Thanks for the eco 101

          • ssfps on 04/02/2026 - 03:08
            +5

            @cloudy: I don't think almost anybody realizes that when they borrow money from a bank for a house, they're effectively inflating the currency, and taking that wealth from people with savings (whether filthy rich w/ savings, or poor people saving a deposit for their first house).
            It's not an ethical system to participate in.

            • tenpercent on 04/02/2026 - 21:19
              +2

              @ssfps: Are there alternatives for the average Joe Blow though?

              • ssfps on 05/02/2026 - 03:17

                @tenpercent: No viable alternative for most people, but I still think it's important people understand the system they are participating in, and who we (mortgage takers) are hurting.

                • tenpercent on 05/02/2026 - 09:36

                  @ssfps: Retirees could think about lending money directly to younger family members for a house to live in or for small business purposes. They could charge a few tenths of a percent less than the bank would charge them. The younger family members save on interest, the retiree earns more than the bank would give them in a term deposit or HISA, and it wouldn't create money out of nothing; win-win-win.

            • tenpercent on 05/02/2026 - 09:38

              @ssfps: It's not just taking wealth from people with savings, it's also taking from people who exchange their limited time here on Earth for wages/salary.

              • ssfps on 06/02/2026 - 02:11
                +1

                @tenpercent: That's true, although inflation alone (in the absence of other compounding factors) would result in people being paid proportionately more due to the supply & demand of their skills/time staying the same.
                Inflation attacks our wages only because, IMO, the population is growing so rapidly - and other more minor causes like increasing taxes/regulations on business, etc, contributing to either wage stagnation or businesses closing up shop.

          • tenpercent on 04/02/2026 - 09:28
            +1

            @cloudy: The average Joe Blow doesn't know it either. It's the banks creating the money.

      • Foxxster on 05/02/2026 - 16:20

        Correct. Their mandate is inflation within their target range and secondly unemployment. And what most people don’t realise is that house prices are NOT included in the inflation figures. However rents are.. So house prices could rise 20% in a year and the RBA would simply sit there with their thumbs in their mouths….

        • ssfps on 06/02/2026 - 02:15

          house prices are NOT included in the inflation figures.

          Can you imagine?
          There would be rioting if the news broadcast the fact we've seen ~100% inflation over the last 3-4 years, and a significant number of mr & mrs grugs joined the dots that their compounded ~%8 of CPI bumps over the same timeframe are significantly less.

        • trapper on 06/02/2026 - 14:13

          The most expensive thing people will ever buy in their lives - not included in inflation figures lol

    • freefall101 on 03/02/2026 - 17:12
      +5

      Were you living under a rock during the 8 interest rate increases in 2022?

      The RBA has one tool, interest rates. They rose rates. What needed to happen was the govt needed to cool down their spending and they didn't. The best they did was kick the can down the road via energy rebates.

      • Drakesy on 03/02/2026 - 17:19
        +5

        I'm not denying the fact that they did the 8 rises, i'm being critical of their timing, when the rest of the world was going through it they sat there and waited for it to happen to us and ultimately lost control when they could've proactively controlled the rates from the get go.

        • freefall101 on 03/02/2026 - 17:31
          +2

          Fair point, they didn't wait until rates hit 8% though.

          You don't want to go too early though as it runs the risk of stagflation. Inflation wasn't occurring because the economy was running too hot, it was because of external factors (Russia invading Ukraine, global shipping prices soaring). Raising interest rates quickly and cooling the economy wouldn't have done much to decrease inflation (prices were going up regardless of what we did here in Australia) but the additional shock to the market could have resulted in significant job losses.

          Once inflation kicks off it can cause even more inflation (like we saw with companies price gouging, also pushes up wages quicker when unemployment is so low), so the govt should have relaxed its workforce and impact on product demand in the economy, but they didn't. So interest rates just kept going up. The RBA walks a fine line on reining in inflation and not making the economy crap itself though. In the end we wore the global price increases and the economy kept growing strongly so I'd say in hindsight they did the right thing. Now that the economy is refusing to cool they're doing the right thing again, but there was no need to preempt it.

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