RBA Tipped to Hold Rates as Banks Split on 2027 Cuts, June 14

The Reserve Bank of Australia will likely hold its cash rate at 4.35 per cent when it meets on Tuesday, June 18. This would be the first pause since January 2026 after three consecutive hikes. Economists agree on a hold this week, but major banks are split on what comes next. The decision matters to mortgage holders facing uncertainty about future payments and to investors watching bank stocks fall amid rate pressure.

Three Banks See Hiking Cycle Over

Commonwealth Bank, NAB, and ANZ now believe the RBA has reached peak rates. CBA has held this view since March and expects two rate cuts in 2027. NAB reversed its forecast on Tuesday and now sees three cuts starting in the second quarter of 2027. ANZ also predicts the hiking cycle has ended and forecasts two cuts in the second half of 2027. All three cite signs of economic slowdown and the restrictive impact of higher rates as reasons to expect cuts ahead.

Westpac Warns of More Hikes to Come

Westpac stands alone among the Big Four, predicting two more rate hikes in August and September 2026. Economists Luci Ellis and Neha Sharma said the RBA remains focused on getting inflation back to its 2-3 per cent target. They noted that soft data on consumer spending and housing would be viewed as necessary pain from monetary policy. HSBC also expects an extended pause before cuts arrive in the third quarter of 2027.

Inflation and Middle East Uncertainty Cloud the Outlook

Headline inflation fell to 4.2 per cent in April from 4.6 per cent in March, but remains above the RBA’s target band. Commonwealth Bank’s Belinda Allen said the central bank will watch the Middle East closely for price impacts. A potential US-Iran peace deal could reopen the Strait of Hormuz, which carries 20 per cent of global oil and gas. This uncertainty makes the RBA’s next moves harder to predict. The cash rate currently sits at 4.35 per cent after three consecutive hikes this year.

Bank Stocks Under Pressure as Hedge Funds Short

The Big Four bank stocks have struggled in 2026. NAB has fallen 15.1 per cent, Westpac down 9.6 per cent, ANZ down 5.6 per cent, and CBA down just 0.2 per cent year to date. Hedge funds have doubled short positions in the Big Four to 10.9 billion AUD over the past six months. Firetrail Investments cited rich valuations and weak earnings growth as reasons for betting against the banks.

Final Thoughts

The RBA will likely hold rates this week, but the path forward remains unclear. With three major banks now forecasting cuts in 2027 and one warning of more hikes, mortgage holders face continued uncertainty about their repayment costs.

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