Will the RBA Cut Rates in 2026? What Markets Are Pricing In
The RBA cash rate has sat at 4.35% since August 2023 — the highest level since 2011, and the result of the most aggressive tightening cycle Australia has seen in three decades. After 13 consecutive hikes that lifted the rate from a historic low of 0.10% to 4.35% in just 18 months, the board has been on hold for almost three years.
Millions of Australian mortgage holders have been waiting for relief. When will rates come down — or could they go higher? The most objective answer doesn't come from economists' forecasts or RBA press releases. It comes from the ASX interbank futures market, where professional investors put real money behind their rate expectations every day.
Here's what those markets are telling us right now.
What ASX Futures Are Currently Pricing
As of 11 August 2026, ASX 30-day interbank cash rate futures markets show no probability of a rate cut at any of the remaining 2026 meetings. Instead, markets are pricing a dominant hold outcome with a gradually building — though still relatively small — probability of a hike by late 2026.
| Meeting | Hold | Hike (+25 bps) | Cut (−25 bps) | Consensus |
|---|---|---|---|---|
| 11 Aug 2026 | 0.0% | Hold | ||
| 29 Sep 2026 | 0.0% | Hold | ||
| 2 Nov 2026 | 0.0% | Hold | ||
| 7 Dec 2026 | 0.0% | Hold |
The pattern tells an interesting story. The November 2026 meeting carries the highest hike probability at 27.2% — nearly one-in-four odds that the RBA will move. But December's probability retreats back to 15.6%, suggesting markets see November as a decision point rather than the start of a new hiking cycle.
Crucially, no meeting in 2026 carries any probability of a rate cut. This is a significant shift from market pricing in 2024 and early 2025, when traders were actively pricing cuts. Those bets were repeatedly unwound as inflation proved stickier than expected.
Why Markets Don't Expect Rate Cuts Yet
For mortgage holders, this is the frustrating answer to the question everyone has been asking. The reason rate cuts aren't on the table comes down to three interlocking problems the RBA is still wrestling with.
Inflation remains above the 2–3% target band. While CPI has retreated significantly from its 8%+ peak in 2022, headline and trimmed-mean inflation have been stubborn in the 3–4% range. Services inflation — driven by rents, insurance, and domestic costs — has proved far more persistent than goods inflation. The RBA has made clear it will not cut while inflation remains above target, particularly given the lessons of the 1970s about cutting prematurely.
The labour market remains resilient. Unemployment has been hovering in the low-to-mid 4% range, which is close to what the RBA considers "full employment." When labour markets are tight, wage pressures remain elevated, which feeds through to services prices and keeps underlying inflation sticky. The RBA would typically want to see unemployment rising toward 5% before it feels confident that demand is cooling sufficiently.
Global central banks are cautious. The US Federal Reserve, European Central Bank, and Bank of England are all navigating similar inflation dynamics. The Fed's stance is particularly influential for Australian markets — a Fed that keeps rates high underpins the US dollar, which in turn puts downward pressure on the AUD. A weaker Australian dollar imports inflation and gives the RBA yet another reason to stay on hold or even tighten further.
The RBA's own guidance has been cautious. Governor Michele Bullock has repeatedly emphasised a "data-dependent" approach and has explicitly pushed back against market expectations of imminent cuts. The board has stated publicly that it sees the risks as "broadly balanced" between a further hike and eventual easing — which maps closely to what futures markets are pricing.
What Would Trigger a Rate Cut?
For the RBA to begin cutting, the board would need confidence that inflation was sustainably returning to target — not just falling temporarily. The key signposts to watch:
- Quarterly CPI sustainably falling into the 2–3% band for two or more consecutive readings
- Unemployment rising to 5% or above as demand softens
- Wage growth (WPI) slowing to 3% or below
- A global recession or significant financial shock (e.g., China slowdown, US recession)
- Housing credit growth and property prices declining materially
- CPI re-accelerating above 4% after temporary decline
- Wages growth re-accelerating above 4.5% annually
- House price inflation returning strongly in major capitals
- Consumer spending proving more resilient than expected despite high rates
- AUD falling sharply, importing further inflationary pressure
The November 2026 peak in hike probability (27.2%) is likely being driven by concern about one or more of the hike triggers above. Markets are not pricing a full hiking cycle — just a meaningful chance that the board might feel compelled to deliver one final 25bp hike before eventually pivoting.
What Would Trigger a Rate Hike?
The idea of a hike after three years on hold might sound surprising, but the RBA has form here. The board cut rates aggressively during COVID, held at record lows for two years, then hiked 13 times in a row as inflation surged. The lesson is that the RBA will respond to data, not to calendar expectations.
The most plausible hike scenario in 2026 would require a genuine re-acceleration of inflation. This could come from: a sharp depreciation in the Australian dollar (perhaps triggered by a global risk-off episode); a rebound in domestic consumer spending as mortgage holders adjust to higher rates and begin drawing on savings; or a global commodity price surge lifting tradeable goods inflation.
It's important to note that even 27% is not "likely" — it means the market thinks a hike is roughly as probable as rolling a 1 or 2 on a six-sided die. The central scenario remains a hold. But it does mean that anyone assuming rates will definitely fall in 2026 is not aligned with where market money is positioned.
How to Track RBA Rate Expectations in Real Time
The probabilities shown in this article are a snapshot from 11 August 2026. Futures markets move every trading day as new economic data arrives — CPI, employment, retail sales, global events — and the probabilities can shift significantly around major data releases.
RBA Watch updates its probability estimates every business day after ASX market close, pulling directly from 30-day interbank cash rate futures settlement prices. You don't need a Bloomberg terminal or a broker account — just bookmark the homepage and check in whenever a major economic release drops or the RBA makes a statement.
The most important data events to watch for the rest of 2026:
- Q2 2026 CPI (July/August) — the critical inflation print before the August meeting
- Monthly CPI indicators — released by the ABS monthly, giving early reads on quarterly trends
- Labour Force Survey — monthly employment data, particularly unemployment rate and hours worked
- RBA Statement on Monetary Policy — quarterly, provides updated forecasts and guidance
- RBA Board Minutes — released two weeks after each meeting, detail the debate