Economists Flag A Tough 2026 as Interest Rates to Rise Again

Australian borrowers could be facing another challenging year, with economists warning that interest rates may rise multiple times in 2026 as inflation remains stubbornly high.

While many households had been hoping the next move would be a rate cut, economic forecasts suggest the Reserve Bank of Australia (RBA) may be forced to tighten policy further if price pressures don’t ease as expected. Several economists now believe rate increases could come in quick succession rather than being spread out gradually.

At the centre of concern is persistent inflation, particularly in services, housing-related costs and wages. Despite previous rate hikes slowing parts of the economy, inflation has not fallen comfortably back within the RBA’s target range — prompting fears that monetary policy may need to stay restrictive for longer.

The outlook has also been shaped by ongoing resilience in economic activity. Strong employment levels and continued demand in key sectors have reduced the urgency for stimulus, giving the RBA more room to prioritise inflation control over short-term relief.

HPartners Takeaway:
Periods of rate uncertainty are exactly when proactive financial planning matters most. Reviewing your cash flow, debt strategy and longer-term goals now can help soften the impact of future rate rises.

If you’re unsure how higher interest rates could affect your situation, or want a clear plan in place, HPartners can help you make confident, informed decisions, no matter what the economy throws your way.

If rates do rise again, the impact will be felt most acutely by mortgage holders and businesses reliant on borrowing, with higher repayments likely to place further pressure on household budgets and cash flow.

For now, the message from economists is clear: expectations of near-term rate cuts may be premature, and Australians should prepare for the possibility that borrowing costs have not yet peaked.