The Reserve Bank of Australia raised the official cash rate by 0.25 percentage points to 4.10% at its 17 March 2026 meeting. It was the RBA's second increase of 2026, following a rise to 3.85% in February, and it came after a series of cuts during 2025. The decision was close: the Board voted 5 to 4, with four members preferring to hold at 3.85%.
The March 2026 Decision and Why the RBA Raised Rates
The RBA said inflation had picked up materially in the second half of 2025. Headline inflation was 3.6% and underlying (trimmed mean) inflation 3.4% over the year to the December 2025 quarter, both above the 2 to 3% target band. Part of that rise was judged temporary, but part reflected pressure on the economy's capacity.
Several factors pushed the Board to act. Sharply higher fuel prices from the conflict in the Middle East threatened to add to inflation, and short term inflation expectations had already risen. The minutes record that oil at around US$100 a barrel could lift headline inflation to about 5% over the year to the June 2026 quarter. The labour market had tightened a little, private demand in late 2025 had been stronger than expected, and housing activity and prices had grown strongly over the previous year. The Board also noted that credit remained readily available and that the effects of the 2025 rate cuts had not yet fully flowed through.
The RBA judged that inflation was likely to stay above target for some time and that the risks had tilted further to the upside. The majority argued that acting early would show a clear commitment to bringing inflation back to target, and could avoid much tighter policy later.
Source: RBA statement and minutes, 17 March 2026; RBA Statement on Monetary Policy, February 2026.
A Close 5 to 4 Vote
Four Board members preferred to hold at 3.85%. They agreed inflation was too high and that further tightening would probably be needed, but pointed to weaker than expected household spending and slower growth in unit labour costs in the December 2025 quarter, and wanted more information on the effects of the Middle East conflict before acting.
What the Rise Meant for Variable Rate Borrowers
Lenders usually pass RBA increases through to variable rate home loans within a few business days, with new repayments applying from the next repayment date. On a $600,000 loan over 30 years, a 0.25 percentage point rise adds about $100 a month to repayments.
For borrowers on older loyalty rates, a rise is a good prompt to review the loan. The gap between an existing customer's rate and the rate a lender offers new borrowers can be significant, and a rate review or refinance can offset some or all of an increase. Fixed rate borrowers are not affected during their fixed term, but should plan for the rate they are likely to roll onto when it ends.
What Happened After the March Decision
March was not the last move of 2026. The RBA raised the cash rate again on 5 May to 4.35%, held in June and August, then raised it to 4.60% on 29 September, saying further tightening was warranted.
By September the RBA reported that housing prices had fallen in most capital cities and that new housing loans had declined noticeably. For the latest view on where rates may go from here, read our Interest Rate Outlook for Australia 2026.
| Decision date | Change | Cash rate after |
|---|---|---|
| 3 Feb 2026 | Up 0.25 | 3.85% |
| 17 Mar 2026 | Up 0.25 | 4.10% |
| 5 May 2026 | Up 0.25 | 4.35% |
| 16 Jun 2026 | No change | 4.35% |
| 11 Aug 2026 | No change | 4.35% |
| 29 Sep 2026 | Up 0.25 | 4.60% |
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About the Author
Sakib Manzoor
Senior Finance Wellness Expert
Sakib Manzoor is the founder of Secure Finance and brings extensive experience in Australian mortgage broking and financial wellness. Specialising in helping clients achieve their property finance goals through personalised strategies and expert guidance, Sakib is FBAA accredited and committed to providing clear, actionable advice. All content is written to meet Australian regulatory standards and is regularly updated to reflect current market conditions.