Blog post by Empower Wealth

(LIVE) RBA Feb 2026 | RBA Reverses Course After Inflation Surges

Australia’s economic story has taken a sharp turn to start the new year.

In its first meeting of 2026, the Reserve Bank has lifted the cash rate by 0.25%, reversing part of last year’s rate cuts and signalling that inflationary pressures are now too strong — and too broad — to ignore.

In this month’s LIVE RBA & Economic Update, Ben Kingsley and economist Evan Lucas unpacked the decision, the data behind it, and what this shift means for household budgets, borrowing power and the property market.

What Happened Today?

The RBA increased the cash rate by 25 basis points to 3.85%, and the statement accompanying the decision was both concise and firm.

Inflation has moved higher for two consecutive quarters, services inflation is proving stubborn, and the Board now expects inflation to remain above target for longer than previously forecast.

The key message seems to be that the RBA is not convinced the worst is behind us, and today’s move may not be the last.

Why the RBA Felt It Had to Move

According to Ben and Evan, several factors left the Board with little room to wait:

Inflation has re-accelerated, breaking out of the target band on both headline and trimmed-mean measures.
Services inflation — the “sticky” kind the RBA watches most closely — is rising again.
Government spending remains elevated, adding demand into an already constrained economy.
Energy prices are surging, with underlying electricity costs up more than 20% without rebates.
The labour market is unexpectedly strong, with unemployment falling to 4.1% and job ads rebounding sharply.

Put simply: demand is running too hot, and the RBA’s toolkit has only one lever.

What This Means for You

With inflation still elevated and the RBA signalling attentiveness to further upside risk, borrowers and investors should expect a more challenging environment than previously anticipated.

Now is the time to:

Strengthen financial buffers
Review lending structures and interest rates
Ensure your property strategy remains aligned with long-term goals
Reassess borrowing capacity and cash flow impacts

The households who understand their numbers — and adjust early — will be far better positioned as conditions evolve.

If you’d like support in reviewing your borrowing strategy or planning your next steps, our team at Empower Wealth is always here to help.

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Tags: Australian economy, Australian property market, Cash Rate, Current Interest Rates, Gross Domestic Product (GDP), Home Loan, Inflation, Interest Rate, Interest Rate Announcement, Monetary Policy, mortgage broking, Property Market, property prices, RBA, rba cash rate, RBA Rate, Reserve Bank of Australia (RBA), Unemployment