Next RBA rate move is down, timing uncertain

09 June 2026
Economy and Markets

• We no longer expect the RBA to hike by 25bp in August.

• The next move in the cash rate is likely to be down, but the timing is uncertain.

• We now see the cash rate ending 2027 at 3.6%.

The next move in the Reserve Bank of Australia’s cash rate is likely to be down, but the timing remains uncertain, according to the latest NAB Economics RBA Watch.

NAB Chief Economist, Dr Sally Auld, said recent data suggests the economy has lost momentum and the outlook for rates has shifted, noting that the broader economic backdrop has changed since earlier in the year.

“The next move in the cash rate is likely to be down, but the timing is uncertain. In February, growth was above trend, the economy was operating above capacity and there was uncertainty over the restrictiveness of rates. None of these conditions exist today,” she outlined.

Dr Auld said recent data pointed to softer momentum across the economy while acknowledging that at the same time, uncertainty remains a key feature of the outlook.

“Both Q1 GDP data and the NAB business survey suggest momentum in the economy has slowed, meaning that growth has likely peaked for the cycle. That said, we are cognisant there is still considerable uncertainty around the outlook, both with respect to activity and inflation.”

Dr Sally Auld said inflation risks and labour market outcomes would be important to watch.

“On the prices side, we are still forecasting above target core inflation through to mid-2027. Margins will compress and weaker labour market outcomes are a risk.”

She said tighter financial conditions are expected to weigh on housing and activity.

“Tighter financial conditions will be reflected in a slowing in house price growth and housing credit growth.”

“In summary, we have greater conviction that the next move in rates is down, but less conviction on the timing.”

Click the link below to read the full report by NAB Economics.

RBA Watch 9 June 2026 (PDF, 354KB)