At its March 2026 board meeting, the Reserve Bank of Australia raised the official cash rate by 25 basis points to 4.10%. The decision — a split one, with two board members dissenting — was widely anticipated by markets after hotter-than-expected services inflation data released in February.
Why did the RBA raise rates?
Governor Michele Bullock cited trimmed mean inflation still running above 3% as the key justification — evidence that underlying price pressures haven't been tamed despite headline CPI returning to target. The Board's concern centres on non-tradeables inflation remaining persistently elevated, suggesting domestic demand and cost structures are keeping services prices sticky. Two members dissented, arguing the labour market data warranted a pause.
What does 4.10% mean for borrowers?
For variable-rate mortgage holders, today's 25bp increase adds to an already significant repayment burden. Here's the approximate monthly increase based on a 30-year loan:
- $400,000 loan: +$53/month
- $600,000 loan: +$80/month
- $800,000 loan: +$107/month
- $1,000,000 loan: +$133/month
Historical context
The cash rate sat at a record low of 0.10% from November 2020 through April 2022. The current rate of 4.10% represents the highest level since early 2012. In total, the RBA has delivered approximately 400 basis points of tightening across this cycle — one of the sharpest in Australian monetary policy history.
What happens next?
The RBA's next meeting is in May 2026. Markets are currently pricing a hold, but another hike has not been ruled out if March quarter CPI data (due late April) surprises to the upside. Most economists expect this to be the final hike of the cycle, with the Board closely watching inflation readings over the coming months before considering any change in direction.