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Why some economists go against the flow on RBA rate bet

Economists diverge on inflation readings with 70% market odds favoring a rate hike, while others expect inflation to ease, influencing the Reserve Bank of Australia’s first 2026 meeting.

  • On Tuesday, Phil O'Donaghoe and a handful of economists expect the Reserve Bank of Australia to hold the cash rate at 3.6 per cent at the board's first meeting of 2026.
  • Heterodox economists argue many peers focus on a rise in core inflation in the Australian Bureau of Statistics quarterly consumer price index, while they highlight the downward trend in the ABS newly-minted monthly inflation series that the RBA treats cautiously.
  • Money markets imply about a 70 per cent chance of a 25-basis point increase, while other forecasts split around 49 per cent for a hike versus 51 per cent for a hold.
  • Federal politicians will grill RBA officials on Friday when Governor Michele Bullock, deputy Andrew Hauser and three assistant governors front a parliamentary committee hearing in Canberra, amid a potential RBA policy U-turn from cuts to hikes.
  • Shane Oliver, chief economist at AMP, says inflation will slow this year, as housing price increases slowed in December and a stronger dollar lowers imported inflation.
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Why some economists go against the flow on RBA rate bet

The Reserve Bank is widely tipped to become the first major central bank on Tuesday to U-turn from rate cuts to rate hikes in the post-COVID inflation era.

·City of Perth, Australia
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fool.com.au broke the news in on Saturday, January 31, 2026.
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