Reserve Bank of Australia Cash Rate Decision – Oliver Hume Commentary | February 2026

RESERVE BANK OFAUSTRALIA RATES DECISION STATEMENT – OLIVER HUME

Today’s decision was much less of a sure thing than you might think just reading the media commentary. Financial markets had priced in about a 66% chance of a 0.25% hike and there were some solid reasons for the RBA to sit on its hands for one more quarterly CPI reading, but in the end, the Board hiked by 0.25% to 3.85% after CPI printed above their own forecasts for the December quarter.

It signals the end to what was a massive turnaround in expectations over the second half of 2025. As late as July 2025, markets and economists expected three more rate cuts by the end of 2026. After today’s hike, many now expect a period of wait-and-see, with the April release of March quarter inflation as the next major guide.

What does this mean for property markets?

Initially, there will be the impact of the rate hike on sentiment and the ability to borrow. We are already seeing some of this in the most interest-rate sensitive markets of Sydney and Melbourne, with the slowing of established house price growth in December and January.

But for both the economy and property markets, we are yet to seethe full flow through of the 0.75% of cuts delivered in 2025. These take time to filter fully through to both household balance sheets and purchasing decisions.

And we have to remember that the reason we’re now getting rate hikes rather than cuts is because the economy is running hotter than expected. Household spending is stronger, unemployment is lower and growth and inflationare higher.

Having one of the three rate cuts last year reversed is undoubtedly, on balance, negative for the property market outlook for 2026. But rates remain 0.5% lower than they were at the same time last year, populationgrowth looks to be picking up again, the amount of available stock, whether itbe in established or new land markets remains low, and we aren’t buildingenough new housing. Price growth in Brisbane, Perth and Adelaide remains hotwhich should help Melbourne take some advantage of its strong affordabilitylevels.

This cut is unlikely to derail recoveries where they have begun (like Melbourne established and land markets) or have more impact than the 3 cuts that have come before it in those hot markets. 2026 is still likely to be a year of growth for new and established property markets.

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Reserve Bank of Australia Media Release: Statement by the Monetary Policy Board: Monetary Policy Decision