The inflation data has forced one of the nation’s big lenders to change its tip for the Reserve Bank’s next move.
Economists at the ANZ, which had been tipping the RBA to use its meeting next week to keep the cash rate steady at 3.6 per cent, now believe it will instead lift it by a quarter percentage point.
They said with the key measure of underlying inflation coming in at 3.35 per cent, and unemployment edging down to 4.1 per cent in December, a lift in the cash rate was now on the cards next Tuesday.
“In the wake of an interest rate increase we would anticipate material softening in leading indicators of activity, such as auction clearance rates, consumer sentiment and business conditions/confidence,” they said in a statement.
“That will weaken the activity case for further rate rises beyond the one we expect. And while price pressures lifted through the second half of 2025, most top-down inflation indicators continue to suggest that a moderation of inflation back into the target range is likely over 2026 and into 2027.”
“Accordingly, we view this as a single ‘insurance’ tightening, not the start of a series of rate hikes.”
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