RBA Cash Rate Increased To 4.10%

Why Did The RBA Increase The Cash Rate In March 2026?

In its March meeting, the Reserve Bank of Australia (RBA) decided to increase the cash rate by 25 basis points to 4.10%. This move was driven by a surprising resurgence in inflationary pressures during late 2025 and growing concerns that global conflicts will keep the cost of living high for longer than expected.

The RBA statement highlighted four key reasons:

Inflation is Proving “Sticky” and Rising Again

While inflation had been cooling since its 2022 peak, it began to climb again in the second half of 2025. The Board is concerned that “inflation expectations”—how much people expect prices to rise—are already ticking up.

If businesses and consumers expect higher prices, they often act in ways that make those price hikes a self-fulfilling prophecy, making the RBA’s job much harder.

Global Conflict and Soaring Fuel Costs

Ongoing instability in the Middle East has driven up fuel prices, creating a major headache for the Australian economy.

The RBA warned that if these energy costs stay elevated, they won’t just hit you at the bowser; they will trickle down into the price of almost everything else. This global uncertainty adds a “material risk” that inflation won’t return to the 2%–3% target range anytime soon.

A Surprisingly Resilient Economy

Despite higher rates, the Australian economy showed more “momentum” than the RBA anticipated late last year. While household spending (consumption) has actually been a bit lower than expected, business investment has been booming. This suggests that the economy is still operating at high capacity, which keeps upward pressure on prices.

The Job Market Remains Very Tight

The RBA acknowledged ongoing uncertainty in both the domestic and global economic outlook.

The unemployment rate has recently been lower than the RBA expected, meaning most people who want a job have one. While this is generally good news, a very “tight” labor market can lead to higher labor costs and more spending power. Even though housing price growth slowed slightly at the start of 2026, the overall strength of the job and property markets suggests the economy isn’t cooling fast enough to kill off inflation.

Our Experts Take On The Board's Decision

Here is what our experts say about the cash rate decision and what it means for borrowers.

The Board is placing more weight on the persistence and breadth of inflation pressures. The RBA already stated that underlying inflation was higher than expected.

The February Statement projected inflation to peak in mid-2026, with underlying inflation at 3.7% and headline at 4.1%. Wage growth has edged up to 3.4% annually.

This supports the view that domestic price pressures have not yet cooled enough.

Sid Bajracharya, Mortgage Broker

I think this is a mistake. Inflationary pressures are being temporarily elevated by the Middle East conflict, and I foresee risk sentiment decreasing as a result. We may see reduced strength in the economy in the coming months, which means the RBA could end up reversing this hike sooner than they think. For borrowers, the refinancing conversation just became urgent — every client should be reviewing their position.

Jonathan Preston, Senior Mortgage Broker

What The Rate Hike Costs You

For someone with a $750,000 mortgage, the combined effect of the February and March hikes amounts to approximately $253 extra per month, or over $3,000 per year compared to the start of 2026.

On the average new mortgage of $660,000, the February hike alone added roughly $110 each month ($1,300 per year). This second hike adds another ~$100 per month.

7 Things You Should Do Now

• 1. Check your repayment impact now.
• 2. Speak to your broker or lender early. Don’t wait for financial stress to build.
• 3. Refinance if you’re on an uncompetitive rate.
• 4. Maximise your offset account. Every dollar reduces interest.
• 5. Don’t overstretch. If your maximum borrowing power is is $500K, aim for $450K.
• 6. Fewer competing buyers mean better negotiating power.
• 7. Don’t try to time the market. If you can afford to buy, buy now.

How The RBA Cash Rate Affects Interest Rates

Lenders add a margin to the official cash rate to determine the variable interest rate they offer to customers.

When the RBA raises the cash rate, lenders often increase their variable interest rates. This means your mortgage repayments go up.

When the RBA cuts the cash rate, lenders may lower interest rates. So, your repayments could go down. However, note that not all lenders pass on the full change.

If the cash rate is unchanged, your repayments usually stay the same. However, lenders can still change rates for other reasons.

Use our rate change calculator to find out what your repayments should look like whenever the cash rate changes.

Upcoming RBA Monetary Policy Board Meeting Calendar 2026

Source: rba.gov.au