RBA Rate Outlook: What the February 2026 Decision Means for You

The February 2026 Decision¶

The Reserve Bank of Australia held the cash rate steady at 3.85% at its February 2026 meeting, marking the fourth consecutive hold after the modest easing cycle that began in late 2025. The decision was widely anticipated by markets, with interest rate futures pricing in only a 12% probability of a cut heading into the announcement.

Governor Michele Bullock emphasised in her post-meeting statement that the Board remains "data-dependent" and sees underlying inflation — currently tracking at 3.1% on a trimmed mean basis — as still above the 2–3% target band. While headline CPI has moderated to 2.7%, the persistence of services inflation continues to give the Board pause.

What the Forward Guidance Tells Us¶

The February Statement on Monetary Policy offered several important signals for the months ahead. The RBA revised its GDP growth forecast slightly downward to 2.1% for calendar year 2026, reflecting softer consumer spending and a cooling labour market where the unemployment rate has edged up to 4.4%.

Crucially, the Board's language shifted from "the Board is not ruling anything in or out" to a more dovish framing: "the Board will be looking for sustained evidence that inflation is returning to target before adjusting the policy stance further." Economists at the major banks interpret this as laying the groundwork for a potential 25 basis point cut at the May 2026 meeting, provided the March quarter CPI print confirms the disinflationary trend.

Consensus Forecasts for 2026¶

Market pricing suggests a terminal rate of around 3.10% by early 2027, implying two to three additional 25 basis point cuts over the remainder of 2026. However, the path is far from certain — a resurgence in global energy prices or stronger-than-expected wage growth could delay further easing.

Impact on Home Loan Rates¶

For the approximately 3.2 million Australian households with a mortgage, the hold at 3.85% means variable rates remain elevated compared to the pandemic-era lows. The average variable owner-occupier rate currently sits at 6.45%, while fixed rates for two and three-year terms have edged lower to around 5.80–6.10%, reflecting market expectations of future cuts.

At Apex Bank, our Essentials Home Loan variable rate stands at 6.29%, and we have passed through prior RBA cuts in full. Borrowers who locked in fixed rates during 2023–2024 at sub-5% levels should begin planning now, as those terms will roll off into significantly higher variable rates.

What Borrowers Should Do¶

• Review your rate: Contact Apex Bank to discuss whether your current product remains competitive. A 0.25% rate reduction on a $600,000 loan saves approximately $95 per month.
• Consider fixing a portion: Split loans allow you to hedge — fix a portion at today's lower fixed rates while keeping some exposure to potential variable rate cuts.
• Stress-test your budget: Ensure you can comfortably service repayments if rates remain at current levels through the end of 2026.
• Offset and redraw: Maximise your offset account balance to reduce interest charges on the variable portion of your loan.

Impact on Savings Rates¶

The prolonged hold has been a tailwind for depositors. High-yield savings accounts are offering bonus rates of 5.10–5.40% for balances meeting monthly deposit and transaction conditions. Apex Bank's High Interest Savings Account currently pays 5.25% with eligible bonus criteria.

Term deposits remain attractive, with 12-month terms at 4.80–5.00%. However, savers should be mindful that if the RBA does begin cutting in Q2, locking in a longer term now could be advantageous compared to waiting for potentially lower at-call savings rates later in the year.

The Bottom Line¶

The RBA's February hold signals that the easing cycle is paused rather than finished. Both borrowers and savers should use this window to review their positions. For personalised guidance on how rate movements may affect your Apex Bank products, speak with our home lending or savings specialists or ask the Apex Concierge for a quick overview of your options.

This analysis is general in nature and does not constitute financial advice. Consider your personal circumstances before making financial decisions.