RBA interest rates live updates: Homeowners face nervous wait on post-call commentary after today’s hold

National Australia Bank says the RBA’s statements on monetery policy has taken “a further step in a hawkish direction”, and sets the central bank up for a rate hike at its first meeting back for 2026 in February.

Group chief economist Sally Auld said the board has little room to absorb any further surprises without adjusting its policy.

“The economy has returned to its trend growth rate, the recovery in private demand has been stronger than expected and the inflation backdrop and near-term outlook are much less favourable than was the case three months ago,” she said.

“In addition, there is uncertainty about the stance of monetary policy and this year’s rate reductions are yet to fully flow through.

“Our sense is that it won’t take much for the RBA to respond to evidence of a more persistent inflation trajectory.

“For now, we see the RBA on hold next year, but risks to the outlook are clearly asymmetric.

“February is now a live meeting should forthcoming inflation data on 7 and 28 January validate the RBA’s fears.”

Jim Chalmer said many homeonwers would have wanted a rate cut today, “but wouldn’t have expected it”.

“This was the expected result,” he said at a press conference in Queensland.

“A lot of Australians would have wanted some more rate relief, but they wouldn’t have expected. There was, in the estimations of the markets and the economists, no chance of a rate cut today and that’s what we’ve seen in this decision taken independently by the Reserve Bank.”

The Treasurer also took aim at criticism that energy rebates have put pressure on inflation.

“The story of our economy in 2025 has been about the very welcome, very encouraging recovery in the private sector,” he said.

“From time to time you’ll hear some absolute rubbish from our political opponents who say that the bank is focused on public spending.

“The Reserve Bank hasn’t actually said that public spending has been a factor in their decisions throughout this whole year.

“No mention whatsoever of public spending in today’s statement. In fact, the opposite.

“They point to the fact that the heavy lifting in our economy is now being done by the private sector, that’s a good thing.”

Michele Bullock says the board will not “jump at one number”, in reference to a question about the latest reading over overall inflation of 3.8 per cent.

“As we get closer to neutral on the interest rate and as we get closer to balance on the economy and employment, it just gets harder.

“This is a difficult situation. We’re coming from a position where we’re somewhere around balanced - maybe a bit tight, maybe financial conditions are neutral - we’ve just got to be very cautious.

“So jumping at one number, I think, would not be the apporpriate thing to do. But the board, quite rightly, has said it does suggest some of the risks are on the upside, particular with some of the downside risks abating a bit.”

Michele Bullock was quizzed on the prospects of a rate cut next year.

In her typical softly, softly approach, here’s what she had to say ...

“I would say at this moment, that given what’s happening with underyling momentum in the economy, that it does look like additional cuts are not needed.

“The private economy is recovering, it’s taking over from public demand - so that’s happening as expected.

“We also know we’re coming from a position where if the economy’s not in balance it might even be a little bit tight. So they’re the circumstances in which I think - and I’ve always said we didn’t go as high as other countries so we possible had not as far to come back.

“So in February we’ll be coming back to this with new data, we’ll be coming back with new forecasts looking at how long it will take to come bacxk to 2.5 per cent becuae that’s our target, and w’re still a fair way from it.”

Michele Bullock was asked about the RBA’s move at its next meeting - which isn’t until February - if December inflation shows another spike.

“Certainly, if the inflation pressures look - when we get more data - to be persistent and they look to be in not one-off items then I think that does raise some questions.

“One is the extent of excess capcaity in the economy, or excess demand, and the tightness of the labour market. And also the question about how restrictive are financial conditions.

“We’ve been judging that financial conditions were still a little bit tight. If inflation continues to be persistent and looks like it’s not coming back down towards the board’s target, then I think that does raise questions about how tight financial conditions are.

“And the board might have to consider where or not it’s appropriate to keep interest rates where they are or in fact raise them.

“But I wouldn’t put a timing on that. It will be a meeting-by-meeting decision.”

We’re live with the post-call presser.

Michele Bullock says the RBA board did not consider a rate cut “at all” at its meeting over the past two days.

“We didn’t explicitly consider the case for a rate rise at this meeting, but we did consider - and discuss quite a lot - the circumstances and what might need to happen if we were to decide that interest rates had to rise again at some poitn next year.

“There was no cut on the table, and no-one suggested there be a cut.”

We’re 15 minutes away from Michele Bullock’s now traditional post-rates call press conference, where you can guarantee the first question will be ‘do you think you’ll have to raise rates?’

Let’s see how the usually calm-and-collected governor plays that one!

My Housing Market chief economist Andrew Wilson warned mortgage holders of potential interest rate rises next year.

“Having misjudged the strength of inflation, particularly in regard to the predictable post-subsidy spike in electricity costs, the RBA will hold rates but may have some difficult decisions in 2026 if inflation keeps rising as expected and the recent modest weakening of the labour market intensifies,” he said.

AMP chief economist Shane Oliver bucked the trend, saying homeowners could get further interest rate relief in 2026.

He gave good news for homeowners, saying Tuesday’s rate hold could just be a matter of timing.

“There is still a possibility of another rate cut and inflation is likely to fall back to target but with growth likely to run around potential the most likely outcome is now for the RBA to leave rates on hold next year,” he said prior to the RBA’s decision.

Markets have shifted towards expectations of interest rates rising, as the nation’s inflation rate came in hotter than expected and consumers unexpectedly returned to the shops.

Consumer spending shocked experts when more than doubled expectations jumping 1.3 per cent in October.

In the lead up to Christmas, Compare the Market’s economic director David Koch says the Reserve Bank will be watching some of those consumables as we buy and party over summer.

“If they start to trend up and add to momentum, the inflation rate could be a real worry, especially if the December quarter figure ends up higher than expected,” he said.

“And if inflation keeps accelerating like this month in, month out, the next move in interest rates could be up.”

Rising interest rates, mortgage and rent affordability were among some of the top concerns for Australians heading into 2026, according to a survey of just over 1000 people by the comparison website.

Asked about their worst financial fear for the New Year, 12.3 per cent said losing a job or source of income was their biggest worry, 11.3 per cent worried about paying energy bills, while 10.9 per cent said a cash rate hike would be the worst scenario.

A similar number feared being unable to pay their mortgage or rent, and 10.2 per cent said they worried about putting money aside for the future.

Almost one-in-six Australians said that having higher interest rates for longer would negatively impact them in some way with 27.6 per cent saying it would affect their ability to save.

Oliver Hume chief economist Matt Bell said households were looking stronger, with rising consumer spending and increases in the monthly household spending indicator.

Unemployment also remains low.

However, there’s a “but”.

“We are seeing auction clearance rates ease below spring long-term averages in the major capitals and clearly inflation pressures remain as a negative influence on households,” Mr Bell said.

“And we know, the strongest short term impact on property market activity is the direction and outlook for mortgage rates.

“For my money, there’s still more factors supporting underlying demand than detracting from it, and supply remains tight everywhere.

“The changed outlook for rates for 2026 has definitely dampened what was a very exuberant outlook, but we’re still expecting improvements in residential markets in 2026.”