Overview
- Citi and NAB now project two 25bp increases in 2026, starting in February and followed by May.
- CBA forecasts a 25bp rise in February, pointing to stronger growth, resilient employment and persistent services inflation.
- Traders price a high chance of no change in February, with a full 25bp hike not fully reflected until later in 2026, including snapshots showing roughly 74% odds of no move.
- Banks warn that delaying action risks entrenching inflation expectations and raising credibility concerns for the RBA, with a faster housing rebound lifting rents and construction costs.
- Westpac dissents from the hawkish shift, arguing rates likely stay on hold through 2026 as inflation cools without new tightening.