RBA Holds Rates as Markets Eye 2026 Hikes

• The RBA wrapped up its final meeting of the year with a widely expected hold, leaving the cash rate at 3.60%. The decision was unanimous and firmly in line with market expectations.
• While the outcome was unchanged, the language wasn’t. The Board acknowledged a more skewed risk profile around inflation and growth, signalling a clear shift toward hawkish policy.
• Governor Bullock reinforced that view, effectively shelving any talk of 2026 rate cuts and noting that the debate now sits between an extended pause or the possibility of further tightening next year.
• Rates markets responded in kind, with 10-year yields lifting toward 4.80% and traders now assigning roughly a 35–40% probability of a February hike – significantly higher than just weeks ago.
• On the data front, the NAB Business Survey showed confidence slipping as profitability and trading conditions softened. Capacity utilisation climbed to an 18-month high, flagging concerns that activity may be stretching beyond a sustainable pace.