Published 18 March 2026. Figures and market conditions described here were current at that time and may have changed since.
For its second meeting of the year, the Reserve Bank of Australia (RBA) has once again raised the official cash rate by 0.25 percentage points, bringing it to 4.10%. However, it was a divided decision, with the board voting 5-4. The majority supported a rate hike, whereas four members advocated to keep the cash rate on hold.
According to the RBA Board, the key reasons fuelling the increase included, inflation pressures hiking higher than expected and the Middle East-driven oil shock adding to rising costs. With the rising economic capacity pressures as well, the Board judged a rate increase necessary.
It does feel counter-intuitive. When households are hurting, why make borrowing even more expensive? Think of it like back-burning during a bushfire. Fire crews sometimes deliberately burn small areas to stop a much bigger, more dangerous fire from spreading.
By making borrowing a bit more expensive, the RBA slows spending in the economy, which helps stop prices from spiralling even further. Unfortunately, the side effect is that mortgages become more expensive in the short term, even though the goal is to stop everyday costs from getting worse.
If you have any concerns or want to check on your current mortgage situation, reach out to a mortgage broker for a no-obligation discussion.
The RBA’s next meeting is scheduled for Tuesday, May 5.
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