No Christmas Miracle: RBA Keeps Interest Rates Unchanged
Introduction:
The Reserve Bank of Australia (RBA) has decided to keep the cash rate at 3.60% in its final meeting of the year. Despite hopes for more relief, inflation remains high, and mortgage costs continue to put pressure on Australians.
Questions & Answers:
Q: What did the RBA decide at its last meeting of the year?
A: The RBA announced that the cash rate will stay at 3.60%. This means borrowers won’t see any extra help before the year ends. (Source: RBA December Meeting Statement)
Q: Didn’t the RBA cut rates earlier this year?
A: Yes. There were three rate cuts in 2025, but since August, the RBA has held rates steady because inflation is still too high. (Source: RBA policy updates)
Q: How bad is inflation right now?
A: Latest figures show inflation at 3.8%, and the trimmed mean at 3.3%, both above the RBA’s target of 2–3%. (Source: ABS data)
Q: Why didn’t they cut rates again?
A: Experts say inflation is stubborn. Costs for rent, energy, and insurance remain high, and household spending is stronger than expected. Dr Nicola Powell from Domain explained that “there’s simply no room for a fourth cut this year.” (Source: Domain Research)
Q: Could rates go up instead?
A: Possibly. Ivan Colhoun, Chief Economist at CreditorWatch, said if inflation stays high, “the risk of an interest rate rise early next year” increases. Financial markets are already pricing in a 0.25% hike before the end of 2026. (Source: CreditorWatch and market forecasts)
Q: How does this affect the housing market?
A: The hold gives stability for sellers and buyers, but mortgage repayments remain high compared to pre-2022 levels. (Source: Domain Research)
Q: What’s the biggest financial worry for Australians?
A: Mortgage costs. According to the Canstar Consumer Pulse Report, 21% of Australians say keeping a roof over their head is their top concern for 2026. (Source: Canstar Consumer Pulse Report)
Q: Are rents also rising?
A: Yes. Over half of renters saw rents go up in 2025 by an average of $62 per week, forcing many to cut spending or move to cheaper homes. (Source: Canstar Consumer Pulse Report)
Q: Will incomes improve next year?
A: Not much. Only 17% expect a pay rise in 2026, while nearly half expect no increase at all. (Source: Canstar Consumer Pulse Report)
Q: Can fixing your mortgage help?
A: It might. Finder’s analysis shows that switching from a variable rate to a fixed rate could save thousands if rates stay the same. Graham Cooke from Finder said, “Fixed rates can provide emotional security and certainty,” but warned that locking in can be risky if rates drop later. (Source: Finder Research)
Conclusion:
The RBA’s decision to hold rates means no extra relief for borrowers this Christmas. With inflation still high and mortgage cost the top worry for Australians, fixing your mortgage could offer peace of mind—but it comes with risks.