TD Securities has adjusted its forecast, now anticipating a rate hike at the Reserve Bank of Australia’s (RBA) first policy meeting of 2026, scheduled for February 3. The revision is attributed to ongoing inflationary pressures, particularly in the rental and construction sectors. Previously, the bank had projected the cash rate would remain stable throughout 2026.
Prashant Newnaha, a senior rate strategist at TD Securities, stated that their forecast of a 0.9 per cent quarter-on-quarter increase in the December quarter is expected to keep annual trimmed mean inflation at 3.3 per cent. This figure remains above the midpoint of the RBA’s 2 to 3 per cent target range. Newnaha suggests this level of inflation should prompt the RBA to implement a 25 basis point hike at the February meeting.
The financial institution is also considering the possibility of a subsequent rate hike in May, contingent on inflation remaining persistent. The release of the December quarter inflation report is scheduled for January 28 and will provide further insights into the economic landscape. Investors and market analysts will closely examine this report to gauge the RBA’s future policy decisions.
