The Reserve Bank of Australia’s Monetary Policy Board raised the cash-rate target by 25 bp to 3.85 % on 3 February 2026, citing a material resurgence of inflation in the second half of 2025 as stronger-than-expected private demand, tight labour conditions and rising capacity pressures threaten to keep consumer-price growth above the 2–3 % target band for an extended period. After trimming the rate by a cumulative 75 bp between February and August 2025 and then holding it at 3.60 % through December, the Board has now reversed part of that easing. No changes were announced to the policy operating framework. Headline and underlying inflation have eased sharply from their 2022 peaks but both accelerated in recent quarters amid firmer household consumption, robust investment and a renewed upswing in housing prices; the Wage Price Index has cooled yet broader wage measures and unit labour costs remain elevated while unemployment has been slightly lower than expected. Financial conditions, which loosened over 2025, are viewed as possibly no longer restrictive, with exchange rates, money-market rates and government bond yields rising alongside higher market expectations for policy tightening. External risks persist, but resilient growth among key trading partners has so far cushioned the domestic economy. The Board pledged to remain “attentive to the data”, focusing on global developments, domestic demand, inflation and labour-market trends, and stated it will act as needed to achiev
Reserve Bank of Australia 2026-02-03
RBA lifts cash rate 25 bp to 3.85 %
The Reserve Bank of Australia’s Monetary Policy Board raised the cash-rate target by 25 bp to 3.85 % on 3 February 2026, reversing part of the 75 bp easing made in 2025. The move responds to a renewed rise in headline and underlying inflation driven by stronger private demand, tight labour conditions and capacity pressures, with the Board pledging data-dependent action to return price growth to its 2–3 % band.