RBA Review: Divided Hike

The RBA has increased the cash rate to 4.1% in the February meeting with a 5-4 vote. Apart from the pick up in underlying inflation since H2 2025, the RBA also believed the Middle East conflict driven high oil price will translate into rising inflation. With inflation risk tilted to the upside, the RBA is being vigilant to hike rates.

The uncertain global outlook has made the RBA more dynamic without a preset rate path. Data dependency remain the forward guidance. While there is no official revision, the RBA will likely revise their inflation forecast higher in the next meeting, unless there is swift resove in the Middle East. There is also a slim chance we will be seeing more than one hike in 2026 if the RBA sees inflation to be higher on geopolitical tension.