RBA lifts rates...

The Reserve Bank of Australia (RBA) has made the decision to increase the cash rate by 25 basis points, bringing the official cash rate up to 3.85 per cent.

While boding potential bad news for homeowners, the decision to hike will likely leave market commentators and analysts unsurprised. Economists predicted the RBA would hike the cash rate following stronger-than-expected inflation figures, labour market resilience and solid consumer demand.

Data released by the Australian Bureau of Statistics (ABS) revealed that headline inflation rose 3.8 per cent in the year to December 2025, up from 3.4 per cent in November. Underlying trimmed mean inflation rose 0.9 per cent over the quarter and 3.4 per cent over the year.

Today’s decision marks the first time the RBA has increased the official cash rate since November 2023, which was followed by an extended period of cash rate holds (at 4.35 per cent) before delivering three rate cuts (in February, May and August 2025).

On the positive side, 12-month Term Deposit rates are now back around the 4.50% level.

Rick Maggi CFP, Westmount Financial, Financial Adviser (Perth)

Rates set to rise...

Higher-than-expected inflation has increased pressure on the Reserve Bank of Australia (RBA) to raise interest rates next week, potentially driving up mortgage costs.

Annual price growth accelerated at the end of 2025, exceeding forecasts and reinforcing expectations of further rate hikes—one of the central bank’s primary tools to cool the economy.

According to the Australian Bureau of Statistics, the Consumer Price Index (CPI) rose 3.8% in the year to December, up from 3.4% in November. On a monthly basis, the CPI climbed 1%.

The trimmed mean, which reflects underlying inflation by excluding extreme price changes, rose 3.3% annually in December, edging up from 3.2% the previous month.

The RBA’s rate-setting board will announce its first decision of 2026 this Tuesday.

Following Wednesday’s inflation data, economists at Westpac and ANZ revised their forecasts and now expect the RBA to raise the cash rate next week. All four major banks are predicting a 0.25 percentage point increase.

Rick Maggi CFP, Financial Advisor Perth, Westmount Financial