RBA’s February rate hike could still be a “close call”

Yasmine Raso

Senior Journalist, Financial Newswire

2 February 2026

While the market has quickly pivoted to pricing in a rate hike as the result of the Reserve Bank of Australia’s (RBA’s) first monetary policy meeting of 2026 tomorrow, some economists have stood their ground arguing the central bank may take a cautious approach and defy expectations with a hold.

The latest RBA Cash Rate Survey conducted by online comparison site, Finder, found only 51 per cent of experts and economists believe the RBA will increase the official cash rate by 25 basis points tomorrow, with a further 20 per cent predicting a rate hike in March and 19 per cent betting on May.

While this means there was a 42 per cent increase in the number of economists expecting a rate hike in February compared to when they were last surveyed in December, many indicated that the RBA could be inclined to adopt a balanced, “wait and see” approach.

“The February meeting is a very close call, i.e. 50/50,” Shane Oliver, Chief Economist at AMP, said.

“December inflation came in above target and was higher than expected which may lead to a hike but against this the trend in underlying inflation has been down in the last few months from the July high. On balance we think the RBA should hold and wait for more information as a premature hike could snuff out the recovery in consumer spending.”

“The RBA will take a slow and cautious approach to tightening policy from here. Inflation data was too spicy, but the trimmed mean was as expected and the central bank won’t want to be seen as jumping at shadows,” Kyle Rodda, Senior Market Analyst at Capital.com, said.

As part of the survey, the economic experts also identified four key issues that are set to influence the RBA’s monetary policy decisionmaking: persistent services costs, the housing and rental crisis, stagnant productivity versus wage growth, and high government spending.

Tim Reardon from the Housing Industry Association said rate hikes would be “counterproductive” as they negatively affect the ongoing housing shortage crisis, which is one of the primary factors contributing to persistent inflation.

“There is an irony at play at the moment, that the main driver of inflation is a shortage of housing and higher interest rates will make this shortage worse,” he said.

“The housing shortage is now a macro economic challenge and it can not be fixed with higher rates.”

James Morley, professor of Macroeconomics at the University of Sydney, said it would “likely take bad news” to spur the RBA into another easing cycle.

“If these [measures] were to tick up, then the RBA would likely shift to being more hawkish,” he said.

“I think the passthrough of a higher dollar to lower import costs and the working off of the effects of energy rebates playing out as expected would allow the RBA to keep rates only a bit higher than currently.

“So only fairly negative news on the real side of the economy would likely push the RBA back into a cutting mode in 2026.”