Your mortgage notice will probably arrive within days of Monday's Reserve Bank decision. If you're among the four million Australians with a home loan, prepare for the word "increase" to appear somewhere on that letter. The RBA is almost certain to raise the cash rate by a quarter of a percentage point to 4.10%, marking the second hike in as many months and continuing a trend that, after years of cuts, is now pushing deep into household budgets.
A Reuters poll of 30 economists conducted this week showed 23 expect the rate rise, while 7 think the bank should hold steady. That 77 per cent consensus is high, but the presence of genuine dissent matters. The disagreement reflects a real economic puzzle: inflation is genuinely a problem, yet there are legitimate questions about whether hiking rates will solve it.
Let's start with the numbers. The February hike took the cash rate to 3.85%. Another quarter-point rise will take it to 4.10%. For someone with a $600,000 mortgage at standard variable rates, that first hike added roughly $90 to monthly repayments. Two more rises of the same magnitude would add another $272 per month to the average household's minimum obligations. That's not theoretical pain; it's cash disappearing from family budgets already stretched by grocery bills, petrol, and electricity.
The RBA's reasoning is straightforward. Inflation fell substantially from its 2022 peak, but it bounced back in the second half of last year. The latest inflation data showed the annual CPI at 3.8% in January 2026, and the RBA's forecasts suggest it will peak at 3.7% around mid-year before gradually returning to the target 2-3% range only in early 2027. That's a long time above target, which the Board judges warrants tighter monetary policy.
The bank also points to stronger-than-expected private spending and labour market tightness. Household demand has been surprisingly resilient, and unemployment remains low. From this angle, the case for rate rises looks reasonable: inflation is persistent, the economy is still running hot, and you can't wish prices down.
But here's where the dissent becomes interesting. The inflation pickup isn't the same as the shock of 2021-2022. It's not being driven primarily by imported goods flooding in at cheaper prices, or energy crises driving commodity costs skyward. Instead, it's coming from domestic demand outpacing supply. When people spend more money than the economy can produce goods and services to meet, prices rise. The question is whether rate rises are the right tool to fix that.
Some economists worry that hiking rates aggressively will simply push the economy into a harder slowdown than necessary, potentially triggering unemployment without solving the underlying capacity problem. If the real issue is that people are spending faster than the economy can supply, then damping demand through rate rises is the orthodox play. But the collateral damage comes quickly: mortgage stress, reduced business investment, and property market volatility.
Already, that's happening. Sydney and Melbourne property markets have stalled over the past month, with both cities posting slightly negative returns, while Brisbane and Perth continue to climb. Rate-sensitive borrowers are pulling back. Builders are reassessing projects.
Here's the honest truth: the RBA faces genuine trade-offs with no perfect answer. Rate rises will cool inflation eventually, but they also cool growth, jobs, and household wealth. Hold rates, and inflation stays elevated, eroding savings and pushing real borrowing costs higher. The bank will almost certainly choose the first path on Monday, as it has done for the past two months.
The real question isn't whether the hike is coming. It is. The question is whether this cycle, once started, will need to go as far as some expect. The RBA's own forecasts suggest rates will need to stay restrictive well into 2027 to bring inflation back to target. That implies pain hasn't peaked yet. Your mortgage notice will be the first reminder of that.