PREVIEW: RBA Rate Decision Scheduled on Tuesday 29th September 2026 at 05:30BST/00:30EDT

• RBA is expected to hike the Cash Rate by 25bps to 4.60% on Tuesday.
• The central bank has remained hawkish after three rate hikes earlier this year.
• Latest rhetoric and hotter-than-expected inflation support a hike.

OVERVIEW: RBA is expected to hike rates when it concludes its 2-day meeting on Tuesday, with money markets fully pricing in the central bank raising the Cash Rate by 25bps to 4.60% from the current level of 4.35%, while all big four banks in Australia are calling for a hike at the meeting. 

RBA KEPT RATES UNCHANGED AT THE LAST MEETING AND MAINTAINED A HAWKISH TONE: RBA kept rates unchanged at the previous meeting in August, as widely expected, with the decision made unanimously, while the central bank maintained a hawkish tone as it stated that inflation is still elevated and too high, with risks skewed to the upside, although it noted that financial conditions appear to be somewhat restrictive and it trimmed its CPI forecasts. Furthermore, it noted that inflation is not expected to return to around the midpoint of the target range until late 2027 and that the board remains focused on preventing high inflation from becoming entrenched, but also acknowledged that following three increases in the Cash Rate Target since the start of the year, financial conditions are now tighter than previously and the economy appears to be slowing as expected. Nonetheless, RBA Governor Bullock stuck to the hawkish script during the post-meeting press conference, where she stated the Board hopes to slow the economy, sees upside risks to inflation, and will raise rates again if needed. She also revealed that they did not discuss a rate cut at the meeting, only raise or maintain, and noted the Board is thinking hard about when it might be appropriate to raise rates and that it is possible that they need to hike again. 

RECENT RHETORIC REMAINED HAWKISH, WHILE FIRMER-THAN-EXPECTED INFLATION SUPPORTS THE CASE FOR A HIKE: The language from the central bank since then has remained hawkish, with Governor Bullock stating that although growth in the Australian economy is slowing, some of the upside risks to inflation appear to be materialising and noted that lowering inflation is essential, while Assistant Governor Hunter commented that the board is concerned about inflation and has low tolerance, adding that it may have to raise rates if there is a sense inflation will be stronger. Furthermore, the data supports the case for a hike as the latest monthly inflation data showed headline CPI YY was firmer than expected at 3.5% vs. Exp. 3.3% (Prev. 3.8%) and with the RBA’s Preferred Trimmed Mean CPI YY at 3.6% vs. Exp. 3.5% (Prev. 3.6%), which remains above the central bank’s 2-3% target.

ANNOUNCEMENT: The rate decision is scheduled for 05:30BST/00:30EDT on Tuesday, and as a hike is widely seen as a forgone conclusion, attention will turn to the statement for clues on future policy and if there are any subtle changes to the central bank’s hawkish tone. Furthermore, RBA Governor Bullock will also be holding a post-meeting press conference, which will begin an hour after the initial rate decision.

A fully priced 25bp hike with unanimous street consensus puts this in the category where the decision itself is the least informative part of the event: in episodes of this kind the market reaction has hinged almost entirely on the statement language and the press conference rather than the print. The distinction worth drawing is between a hike framed as the last of the cycle and one framed as part of an open-ended tightening bias; the former tends to steepen the front end into a peak-rate narrative, the latter keeps the terminal pricing live. The RBA's own framing, that it did not discuss a cut and is thinking about when, not whether, to raise again, fits the pattern of late-cycle central banks that prefer to retain optionality rather than declare the job done, and trimmed mean inflation still above the target band is the mechanism keeping that bias credible. The tell in comparable episodes has been any softening of the upside-risk language or a shift toward emphasising restrictive conditions, both of which have historically marked the transition from hiking bias to hold. The press conference an hour after the decision has been the venue where governors of this bank have moved pricing beyond the statement, so the sequencing of the two events matters for how the front end and the AUD settle.