If you were hoping 2026 would bring meaningful rate relief, ANZ has just poured cold water on that expectation. In its latest economic note, the big four bank has walked back its call for an early-2026 cut, instead predicting the Reserve Bank of Australia will keep the cash rate parked at 3.60% for an extended period.
It’s a shift that says less about looming pain, and more about the push-and-pull forces currently shaping the RBA’s decisions. Inflation is proving sticky. Employment is still impressively resilient. And the central bank is staring at a data backdrop where neither hiking nor cutting looks compelling.
So, where does that leave homeowners, investors and anyone trying to make sense of the next 18 months of policy?
Why ANZ No Longer Sees Early-2026 Rate Cuts
According to ANZ’s Head of Australian Economics, Adam Boyton, the RBA’s competing mandates, price stability and full employment, are moving in opposite directions. Inflation unexpectedly lifted to 3.8% in October, while unemployment remains historically low at 4.3%.
As Adam Boyton outlines:
“We no longer see one final rate cut from the RBA in the first half of 2026, given recent inflation pressures… With growth around potential, the activity case for further easing is also less clear.”
ANZ also doesn’t believe this bump in inflation is permanent, meaning the bank is not expecting rates to rise. Instead, borrowers should prepare for a long, steady period of stability.
A Surprise Jump in Inflation
While October’s headline inflation came in hotter than expected, ANZ argues the factors behind the rise are temporary. The trimmed mean (the RBA’s preferred core measure) nudged up to 3.3%, but not enough to justify a hike.
The RBA has again emphasised that decisions will remain “data dependent.”
With inflation above target, unemployment still tight and growth close to potential, it becomes difficult to justify any major move.
Other Economists Agree: Cuts Aren’t Coming Soon
HSBC Chief Economist Paul Bloxham shares the same view: a long hold through 2026, with the next upward move unlikely until 2027.
With the economy running near capacity and the housing market strengthening, rate cuts simply aren't on the table.
Stability Isn’t Boring. It’s Strategic
From my perspective, this “extended hold” environment is actually an opportunity, not a setback.
For the last few years, borrowers have been living in a hyper-volatile cycle, with record lows, rapid hikes, and constant headlines. What we’re entering now is a rare window of predictability. And when you know rates are likely to sit still, you can plan with more confidence.
My thoughts are:
- Don’t wait for cuts when the data doesn't support them. Too many borrowers make decisions based on hope rather than indicators.
- A balanced labour market is a good sign. Rising unemployment would be far worse than a delayed rate cut.
- This is a moment to review your structure. Not out of fear, but out of opportunity.
It’s less about guessing the next move and more about making your own position more resilient.
Should Borrowers Consider Fixing?
With the cash rate expected to remain at 3.60% longer than expected, now could be a strategic time to lock in a portion of your loan.
A split structure, part fixed, part variable, can offer:
- Budget stability
- Protection if inflation remains stubborn
- Flexibility if the cycle shifts unexpectedly
You’re not trying to “beat the market”, you’re building insulation.
Inflation Is Sticky
ANZ’s new outlook reinforces the idea that the RBA is in no hurry. Inflation is sticky, the labour market is strong, and the economic signals don’t point clearly in either direction.
But for borrowers, this period of stability could be the most useful environment we’ve had in years. A chance to review, restructure, and make decisions with clarity, not panic.
