Citi Projects Consecutive RBA Rate Increases in Early 2026

Citi's analysts predict that the RBA will raise the cash rate by 25 basis points in February, followed by another increase in May. This would mark a shift from the previous expectation of a stable cash rate throughout 2026.

The adjustment in Citi's outlook is influenced by data revealing a 3.4% rise in consumer prices over the year to November 2025, surpassing earlier projections. Additionally, robust consumer spending and a resilient job market suggest that the economy is operating at a higher capacity than previously thought.

For borrowers, these anticipated rate hikes could result in increased interest rates on loans and mortgages, leading to higher monthly repayments. Conversely, savers may benefit from improved returns on deposits as interest rates rise.

It's noteworthy that Citi's forecast aligns with similar predictions from other financial institutions, indicating a growing consensus on the likelihood of RBA rate hikes in response to inflationary pressures.

In summary, Citi's projection of two RBA rate increases in early 2026 reflects a response to emerging economic data pointing to sustained inflation. Australians are advised to monitor these developments and assess their financial plans in light of potential changes in monetary policy.