RBA Keeps Cash Rate Steady at 3.6%, Hawkish Shift Possible

BREAKING: The Reserve Bank of Australia (RBA) is set to maintain the Cash Rate at 3.6% in its upcoming announcement, scheduled for tomorrow. As markets await the decision, all eyes are on the accompanying statement and press conference for potential shifts in the bank’s stance on inflation.

Analysts widely anticipate a cautious tone from the RBA, especially given the current inflationary pressures. However, the possibility of a hawkish shift remains on the table, particularly if the RBA signals increased concern about rising prices. Recent comments from RBA’s Governor Bullock have heightened market speculation. She indicated that if inflationary pressures prove to be more permanent, it would significantly affect future monetary policy decisions.

The statement from the RBA will be pivotal. Traders are eager to dissect any language suggesting that further rate reductions are off the table or that current monetary policy is no longer considered restrictive. If the RBA acknowledges persistent inflation risks, it could tilt towards a more aggressive approach.

During her recent address to the Senate Economics Legislation Committee, Bullock highlighted, “if inflationary pressures were more permanent, it would have implications for the future path of monetary policy.” This statement clearly underscores the RBA’s readiness to implement rate hikes should inflation data surprise to the upside.

Market expectations are already shifting. Current pricing reflects a 0% probability for a rate cut in December, while there is a 50% chance of a rate hike by June 2026, escalating to a 100% certainty by August 2026. Overall, traders are projecting a total tightening of 35 basis points for 2026.

The upcoming release of the November CPI on January 7, 2026, and the Q4 CPI report due on January 28, 2026, will be critical in shaping the RBA’s next moves. The following RBA meeting is scheduled for February 4, 2026, where further insights into monetary policy will be provided.

As developments unfold, the financial community is urged to stay alert for updates that could signal a decisive turn in Australia’s economic landscape. Will the RBA maintain its cautious outlook, or will it pivot towards a hawkish stance? The answer may soon reshape the future of interest rates in Australia.