A shock rebound in inflation has set the stage for the Reserve Bank’s second-fastest policy U‑turn on record, with markets tipping a rate hike as soon as this afternoon.
It follows a unanimous decision to hold the cash rate only six weeks ago.
According to a new analysis from bheja.ai, the RBA has flipped this fast just once before.
In 2001–02, the bank moved from cutting to hiking in 154 days, after warning conditions had “changed markedly” and “the outlook no longer warranted” its previous stance.
The thread tying both reversals together: rapidly shifting data undermining the initial assessment.
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The potential pivot comes hard on the heels of the Board’s December hold at 3.6 per cent.
As recently as November, a survey of 33 economists pointed to rates staying at or below current levels through the first half of 2026.
Today, markets are pricing a 72 per cent chance of a hike at tomorrow’s meeting and it was a single month that changed everything.
Source: bheja.ai
December’s inflation print snapped what looked like a promising downtrend.
Headline inflation rose to 3.8 per cent from November’s 3.4 per cent, while the trimmed mean ticked up from 3.2 per cent to 3.3 per cent – both still above the RBA’s 2–3 per cent target band.
Even the Board didn’t see the speed of the turn coming.
Source: bheja.ai
December minutes flagged “signs of a more broadly based pick‑up in inflation” and acknowledged “the risks to inflation have tilted to the upside”, but stressed it would take “a little longer to assess the persistence of inflationary pressures” and that the impact of past rate increases was “yet to flow through fully”.
If the RBA hikes today, it would signal the Board underestimated how quickly it needed to abandon a‑wait-and-see‑approach.
“The Board said in December they needed ‘a little longer to assess’ inflation persistence. One month later, they may not wait,” bheja.ai CEO and Founder Pravin Mahajan said.
The RBA board will meet today with experts tipping a rate rise is on the cards.
“If the RBA hikes (today), it would represent the second-fastest policy flip in their history. “For borrowers with a $750,000 mortgage, a 25 basis point hike would add approximately $115 to monthly repayments, or $1,380 per year to a home loan with a 5.89 per cent interest rate and 25 years remaining.”
The unanimity in December is notable.
Before the previous rate cut, a split Board signalled change was coming.
This time, there was no warning — another sign of how swiftly the inflation pulse has turned.
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