RBA Maintains 3.6% Rate Amid Inflation Concerns – What’s Next?

UPDATE: The Reserve Bank of Australia (RBA) is set to keep the Cash Rate unchanged at 3.6% in its upcoming meeting tomorrow, January 4, 2026. This decision comes amid rising inflation concerns, leaving investors and economists on high alert for any shifts in the bank’s monetary policy stance.

As the RBA prepares to release its statement, all eyes are on the potential for a hawkish shift in tone. Officials have signaled a cautious approach, but any indications of increased concern regarding inflation could lead to a significant policy shift. RBA’s Governor Bullock has previously stated that if inflationary pressures persist, it would necessitate adjustments to future monetary policy.

The key focus will be on the statement following the meeting. Analysts are closely monitoring for any hints that the RBA does not foresee further rate reductions or views current monetary policy as restrictive. Such language would signal a more aggressive stance. In her recent address to the Senate Economics Legislation Committee, Bullock emphasized, “

If inflationary pressures were more permanent, it would have implications for the future path of monetary policy.

” This statement has raised expectations that the RBA may act if inflation continues to surprise on the upside.

Traders are particularly attentive to how the RBA interprets recent inflation data. If the bank acknowledges that two-thirds of the rise in Q3 Consumer Price Index (CPI) could be merely “noise,” it would suggest a more lenient approach. However, should they express heightened concern about inflation trends, it may prompt market participants to adjust their rate hike expectations.

Looking ahead, crucial CPI data is scheduled for release on January 7, 2026, which could provide further insights into inflation trends. The Q4 CPI is set to follow on January 28, 2026. The RBA’s next meeting is confirmed for February 4, 2026, where further discussions on monetary policy will take place.

Market pricing currently indicates a 0% probability of a rate cut in December 2026, with a 50% chance of a rate hike by June 2026 and a complete 100% probability of a rate increase by August 2026. Analysts anticipate a total tightening of 35 basis points throughout 2026, underscoring the critical nature of the RBA’s upcoming decisions.

As inflation continues to dominate economic discussions, the RBA’s next moves will be pivotal for both the Australian economy and global markets. Investors should prepare for potential volatility as the central bank navigates these complex economic waters. Stay tuned for updates following the RBA’s announcement tomorrow.