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The Reserve Bank of Australia raised the cash rate target by 0.25 percentage points to 3.85% at its 2–3 February 2026 board meeting. This was the first rate increase since November 2023, reversing the easing cycle that delivered three consecutive cuts during 2025 (February, May,
The 2025 cuts were based on expectations that inflation would continue falling. When core inflation stalled above the 2–3% target and domestic demand rebounded strongly, the RBA concluded the cuts had been premature and reversed course to prevent inflation from re-accelerating.
Approximately $92 per month more on a $600,000 P&I variable loan over 30 years. That's about $1,104 extra per year. If your lender only passes on part of the increase, the impact will be slightly less.
Fixed rates are currently below variable rates, offering a discount of 30–50 basis points. Fixing locks in certainty but you lose offset account benefits and flexibility. Consider a split loan - fix a portion for certainty and keep the rest variable with an offset.
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