If you budgeted around a 3.6% cash rate at the start of 2025, you were following the consensus. Most forecasters expected the RBA’s next move to be down, not up. Instead, the Reserve Bank raised the cash rate three times through 2026 — in February, March, and May — taking it to 4.35%, and has now held it there through both the June and August meetings. The next decision lands on 28–29 September.
If your repayments have crept up three times this year while you were waiting for relief, you’re not imagining it, and you’re not alone. Here’s what actually happened, why, and what’s worth doing about it before the September decision.
Why the RBA Raised Instead of Cutting
The short version: inflation didn’t cooperate. Headline inflation picked up through the second half of 2025, and the Bank’s own analysis found that some of that increase reflected genuine capacity pressure in the economy, not just temporary noise. Trimmed mean inflation — the measure the RBA actually targets — has stayed elevated and largely unchanged since the March quarter, sitting well above the 2–3% target band.
A few specific pressures kept showing up in the RBA’s public statements through the year:
- The Middle East conflict pushed oil and related commodity prices higher, and while the pass-through to local inflation was smaller than initially feared, it hasn’t fully unwound.
- The global AI investment boom has kept demand resilient in ways that offset some of the intended slowing effect of higher rates.
- Weak productivity growth means the economy can’t absorb wage and cost pressures as easily as it could in a higher-productivity environment, so the same nominal pressures translate to more inflation than they otherwise would.
Deputy Governor Andrew Hauser said plainly in a recent speech that the RBA would need to raise rates again if these upside risks materialise further. That’s not a throwaway line — it’s the Bank telling borrowers directly that August’s hold isn’t necessarily the end of the story.
What Three Hikes Actually Cost You
Every rate rise this year added to monthly repayments rather than easing them. If you’re on a variable rate and haven’t sat down with the actual numbers since May, it’s worth doing now rather than after the September meeting. Three 0.25% moves compound — the difference between your repayment at the start of 2026 and now is larger than any single rise might suggest, and it’s easy to lose track of the cumulative effect when it happens in stages rather than one jump.
This is genuinely one of the more disorienting rate environments I’ve seen in three decades of doing this. Most cycles have a clear direction people can plan around. This one reversed on people mid-plan — and if your budget assumed relief that never came, that’s not a failure of planning, it’s a forecast that didn’t hold.
Where the Forecasts Actually Stand
Economists are genuinely split heading into September, which is worth knowing because it means nobody has a confident answer — including, to some extent, the RBA itself. A Finder survey around the August decision found 44% of economists still expecting at least one more rate rise before the end of the year. The major banks’ own forecasts diverge on timing and magnitude for when cuts might eventually begin.
What that split means practically: if you’re deciding between fixed and variable right now, you’re not choosing based on a consensus forecast, because there isn’t one. You’re choosing based on your own tolerance for another possible rise versus the certainty of locking in today’s rate.
What to Actually Do About It
A few things worth doing before the September decision, rather than after:
Get your actual numbers in front of you
Not an estimate — your actual current repayment versus what it was in January. Most people underestimate the cumulative effect of staged rises because each individual increase feels manageable on its own.
Talk to your lender before you’re behind, not after
If three rate rises have put real pressure on your budget, the conversation to have is with your lender directly, before a missed payment rather than after one. Options like restructuring, extending a loan term, or moving to interest-only for a defined period are genuinely easier to arrange proactively than reactively, and lenders would generally rather work with you early than manage a default later.
Don’t assume the fix/variable calculus is the same as it was two years ago
The case for fixing looked very different during a cutting cycle than it does now, with genuine uncertainty about whether the next move is up or down. Whatever you decide, decide it based on the current split forecast, not on what made sense when everyone assumed cuts were coming.
Review before September, not after
Whatever the RBA decides at the end of September, you’ll be in a stronger position having already looked at your numbers than scrambling to react afterward. If another hike does land, the households who’ve already reviewed their position will absorb it far more easily than those who haven’t looked since May.
The Bottom Line
Nobody — not the banks, not most economists, and not the RBA itself in its own public statements — is confidently certain what happens next. That uncertainty is exactly why this is the moment to get your own numbers straight rather than wait for clarity that might not arrive by September. The households who come through this cycle in the best shape aren’t the ones who guessed the RBA’s next move correctly; they’re the ones who reviewed their position early enough to have options.
Related Reading
- Canberra Property Market 2026: Rate Rises, Not Cuts, Reshape the Outlook — how this same rate environment is playing out in the Canberra market specifically
- Home Finance: 10 Effortless Strategies to Master Your Stunning Budget — rebuilding your budget around your actual current repayments
- Home Buying: The Ultimate Guide to Finding Your Stunning Dream Home — if you’re weighing whether to buy in this rate environment at all
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