Is the RBA done with rate hikes?

June 10, 2026

The two major banks have seen a pivot on interest rates in the past week. They now expect the Reserve Bank of Australia (RBA) to keep the official cash rate on hold until the middle of next year, before delivering cuts.

The CBA was the first to change its view, forecasting last week that the RBA would remain on hold at 3.35% until early 2027, followed by a rate cut at monetary policy meetings in May and August next year.

The NAB has joined the CBA, predicting that the RBA will start cutting rates in the first half of next year, spurred by economic headwinds such as historically weak consumer sentiment, falling house prices, the war in Iran, and the federal government’s controversial budget tax reform.

The NAB predicts the official cash rate will settle at 3.60% by the end of 2027, which means the RBA will reverse the three rate cuts this year and return the official cash rate to February levels.

“The next move in cash rates is likely to be lower, but the timing is uncertain”, NAB chief economist Sally Old and the bank’s head of Australian economics Gareth Spence said.

“If activity data weakens faster than expected, the RBA will cut earlier than we currently forecast”.

For now, the Australian interest rate futures market does not share the outlook of the CBA and NAB. It is still forecasting that the RBA will raise another interest rate this year.

I have a similar view on NAB and CBA that we have probably seen the end of rate hikes.

While inflation remains above the RBA’s 2% to 3% target band, it will take comfort in the fact that the housing market has stalled, with values now falling in the common capital cities.

Australia’s unemployment rate is also rising faster than the RBA forecast, with the economy entering another per capita recession after GDP per capita fell 0.1% in the March quarter.