March Meeting Preview

Quick take

Markets had repriced quickly through the week. Hold was back as the base case for March, but hike risk remained meaningful and cuts were still a low-probability tail.

The live elements have been retired. What remains below is the original pre-meeting briefing, preserved as a dated snapshot.

At a glance

At publication, pricing still favored no change at the next meeting, but the distribution was wide enough that a surprise hike remained on the table.

For borrowers, that means the range of plausible outcomes remains wide into decision day, and intraday moves in futures can be sharp when new data lands.

The article was written to frame how conviction had changed through the final sessions before decision day.

Where we left off

In February 2026, the RBA hiked by 25bp and made it clear inflation was still too high for comfort.

Even after that, markets initially leaned toward a March pause. That is why hike odds started this week from a much lower base.

Coverage: ABC News

What changed this week

1. RBA communication stayed hawkish. Governor Michele Bullock said a March hike had not been ruled out. When the Governor keeps tightening on the table, traders usually reprice quickly. In practice, this shifts the reaction function: markets move from assuming policy has peaked to assigning more probability to another tightening step if inflation momentum does not moderate. Reuters.
2. Growth data came in stronger than expected. Australia's GDP printed around 0.8% q/q and 2.6% y/y. Stronger activity makes it harder to argue inflation pressure is fading quickly. When growth holds up above expectations, markets tend to reduce confidence in near-term easing and push expected rate cuts further out on the calendar. Bloomberg.
3. Energy risk moved higher again. Rising oil prices can feed into transport and broader business costs. That adds upside inflation risk and makes quick rate cuts less likely. Even if domestic demand cools, imported cost pressure can delay the disinflation path and keep policy caution elevated for longer. ABC News.

What this means for borrowers

• Policy is still restrictive, and near-term relief is not the base case.
• A pause is still plausible, but cuts are currently the low-probability outcome.
• Further hikes in 2026 remain a meaningful risk in market pricing.
• Expect volatility in rates pricing into and just after the meeting.

What rates could look like for the rest of 2026

Beyond March, futures pricing still implies a wide range of paths. The key question is whether policy stays around current restrictive levels for longer, or starts to ease later in the year if inflation and activity soften together.

At the time of publication, futures pricing still pointed to a restrictive year-end cash-rate path rather than a quick reversal in policy.

In other words, markets are not pricing quick relief this year. The dominant message from the curve is "higher for longer," with a meaningful chance that policy either tightens again or stays restrictive deeper into 2026 than many expected earlier in the year.

• If inflation proves sticky, markets can keep pricing a higher-for-longer cash-rate path.
• If growth slows materially and disinflation broadens, late-2026 easing odds would likely rebuild.
• Volatility around each data release matters because it can move both the next-meeting odds and the full year-end path.

What to watch before decision day

• Any late RBA communication that changes tone on inflation persistence.
• Domestic labor-market or inflation-surprise headlines.
• Global commodity moves, especially oil, and associated risk sentiment.
• Whether hike probabilities hold, fade, or accelerate in the final days.