A shock rebound in inflation has set the stage for the Reserve Financial institution’s second-fastest coverage U‑activate document, with markets tipping a price hike as quickly as this afternoon.
It follows a unanimous determination to carry the money price solely six weeks in the past.
Based on a brand new evaluation from bheja.ai, the RBA has flipped this quick simply as soon as earlier than.
In 2001–02, the financial institution moved from slicing to mountaineering in 154 days, after warning circumstances had “modified markedly” and “the outlook not warranted” its earlier stance.
The thread tying each reversals collectively: quickly shifting information undermining the preliminary evaluation.
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The potential pivot comes laborious on the heels of the Board’s December maintain at 3.6 per cent.
As just lately as November, a survey of 33 economists pointed to charges staying at or beneath present ranges by means of the primary half of 2026.
In the present day, markets are pricing a 72 per cent likelihood of a hike at tomorrow’s assembly and it was a single month that modified the whole lot.
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December’s inflation print snapped what seemed like a promising downtrend.
Headline inflation rose to three.8 per cent from November’s 3.4 per cent, whereas the trimmed imply ticked up from 3.2 per cent to three.3 per cent
Even the Board didn’t see the velocity of the flip coming.
December minutes flagged “indicators of a extra broadly based mostly decide‑up in inflation” and acknowledged “the dangers to inflation have tilted to the upside”, however pressured it might take “a bit longer to evaluate the persistence of inflationary pressures” and that the affect of previous price will increase was “but to movement by means of totally”.
If the RBA hikes right now, it might sign the Board underestimated how shortly it wanted to desert a‑wait-and-see‑strategy.
“The Board mentioned in December they wanted ‘a bit longer to evaluate’ inflation persistence. One month later, they might not wait,” bheja.ai CEO and Founder Pravin Mahajan mentioned.
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The RBA board will meet right now with consultants tipping a price rise is on the playing cards.
“If the RBA hikes (right now), it might characterize the second-fastest coverage flip of their historical past. “For debtors with a $750,000 mortgage, a 25 foundation level hike would add roughly $115 to month-to-month repayments, or $1,380 per 12 months to a house mortgage with a 5.89 per cent rate of interest and 25 years remaining.”
The unanimity in December is notable.
Earlier than the earlier price reduce, a cut up Board signalled change was coming.
This time, there was no warning — one other signal of how swiftly the inflation pulse has turned.
