RBA Expected to Hold Rates as Three Major Banks Forecast 2027 Cuts, June 14

The Reserve Bank of Australia will decide on interest rates this week amid a major shift in bank forecasts. Three of the nation’s four major banks now expect the RBA to keep rates steady through 2026 before cutting in 2027. ANZ recently joined Commonwealth Bank and NAB in revising down growth expectations as higher borrowing costs weigh on households and businesses.

Banks Flip to Rate-Hold Forecast

ANZ, CBA, and NAB now predict the RBA will hold rates unchanged throughout 2026 before beginning cuts next year. This marks a sharp reversal from earlier expectations of further hikes. The shift reflects slowing economic activity and signs that higher borrowing costs are already damaging household and business spending. Westpac remains the outlier, still forecasting additional rate hikes this year.

Economic Growth Slows as Debt Weighs

Australia’s unemployment rate stood at 4.3% in March 2026, unchanged from February. The RBA expects inflation to reach 4.2% by mid-2026, remaining above the central bank’s target. Economists believe the rate hiking cycle may be over as slowing growth and household debt constraints limit the RBA’s room to move.

Geopolitical Uncertainty Adds to Caution

Markets rallied this week on hopes of a US-Iran deal, which could ease global tensions and inflation pressures. The RBA faces a dilemma between fighting inflation and avoiding recession. A potential peace deal could reduce oil prices and ease inflation, giving the central bank more flexibility to hold or cut rates sooner than expected.

What This Means for Borrowers

If three major banks are correct, borrowers can expect rates to stay flat through the end of 2026, then decline in 2027. However, uncertainty remains. Westpac’s continued hike forecast and ongoing inflation concerns mean the RBA could still surprise. Mortgage holders should prepare for rates to remain elevated for at least the next six months.

Final Thoughts

The RBA’s hold decision this week will likely confirm the shift away from rate hikes. With three major banks now forecasting cuts in 2027, borrowers may see relief next year if economic growth continues to slow.

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