RBA Interest Rate Outlook

Over the past few months, many borrowers have been hoping that the worst of the interest rate cycle is behind us. However, as we approach the Reserve Bank of Australia's next meeting on 29 September, economists remain divided on whether another rate rise could be on the horizon.

While no one can predict the RBA's decision with certainty, recent economic data has increased speculation that the Board may need to take further action to keep inflation under control.

Why Is Another Rate Rise Being Discussed?

The RBA's primary objective is to keep inflation within its target range of 2% to 3%. Although inflation has eased from the highs experienced in recent years, underlying inflation remains stubbornly above the target band.

Recent inflation figures showed annual CPI running at 3.5%, while underlying inflation remained largely unchanged. More importantly, the Australian economy has proven more resilient than many economists expected, with recent GDP figures coming in stronger than forecast.

When inflation remains elevated and economic activity stays strong, the RBA becomes concerned that price pressures could persist for longer than expected. In those circumstances, higher interest rates remain one of the key tools available to slow spending and bring inflation back under control. [rba.gov.au], [aussie.com.au]

What Are Economists Saying?

One of the reasons there is so much uncertainty surrounding the September meeting is because economists themselves are split.

Some major banks believe another rate rise is likely before the end of the year, although not necessarily in September.

• NAB is forecasting a 0.25% increase at the September meeting.

• CBA and ANZ currently expect another increase later in the year, most likely in November.

• Westpac remains in the camp that the cash rate may stay unchanged for the remainder of 2026. [aussie.com.au]

Other economists have recently shifted towards a more hawkish outlook after stronger-than-expected economic growth figures. Analysts from Capital Economics have suggested that recent GDP and inflation data could justify another increase as early as September. [econotimes.com]

At the same time, market pricing suggests investors believe there is still a reasonable chance the RBA will hold steady in September, with expectations split between a hold and a rate rise. [centralbank.watch]

In other words, there is no clear consensus.

My Perspective

Having worked in the finance industry for nearly 30 years, I've learned that the market often becomes fixated on trying to predict the RBA's next move. While that makes for great headlines, most borrowers are usually better served by focusing on what they can control rather than trying to guess the outcome of a single meeting.

The reality is that interest rates remain significantly higher than they were only a few years ago. Whether rates increase by another 0.25% in September, November, or not at all, many households are already feeling the impact of higher mortgage repayments and increased living costs.

From my perspective, the bigger question isn't whether rates rise once more. It's whether your current loan structure still suits your circumstances.

What Would a 0.25% Rate Rise Mean?

For borrowers with a variable home loan, another 0.25% increase could have a noticeable impact on monthly repayments.

As an example:

Loan Balance	Approximate Monthly Increase
$500,000	Around $80 per month
$750,000	Around $120 per month
$1,000,000	Around $160 per month

While these figures are estimates only, they demonstrate how even a relatively small movement in rates can place additional pressure on household budgets.

What Should Borrowers Be Doing Now?

Rather than worrying about what the RBA may or may not do in a few weeks' time, consider using this period as an opportunity to review your financial position.

Review Your Interest Rate

Many borrowers are paying a higher rate than necessary simply because they haven't reviewed their loan recently. Lenders regularly change pricing, and loyalty doesn't always lead to the best deal.

Check Your Cash Flow

Understanding where your money is going can help identify opportunities to reduce expenses and build a buffer against future rate movements.

Consider Refinancing

A refinance may provide access to a more competitive rate, better features, or a loan structure that better aligns with your goals.

Build a Safety Buffer

If your budget allows, making additional repayments or building funds in an offset account can provide valuable flexibility if rates remain higher for longer.

The Bottom Line on the RBA Interest Rate Outlook

The September RBA meeting is shaping up as one of the most closely watched decisions of the year. With inflation still above target and economic growth proving more resilient than expected, the possibility of another rate rise cannot be ruled out.

Some economists believe a September increase is likely. Others expect the next move to come later in the year. A few still believe the RBA may be finished raising rates altogether.

Regardless of which RBA Interest Rate Outlook forecast proves correct, now is an ideal time to ensure your home loan remains competitive and that your finances are prepared for a range of possible outcomes.

If you're unsure whether your current loan is still the right fit, our team would be happy to complete a complimentary home loan health check and explore whether there may be a better solution available.

Because when it comes to your loan, trying to predict the future is difficult, but making sure you're prepared for it is something you can control.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.