Major Banks to Implement Interest Rate Hike | February 4, 2026

Morgan Winslow

Published: February 3, 2026 4:24 PM ET

Major Banks to Implement Interest Rate Hike | February 4, 2026

Australia’s major financial institutions are poised to implement an interest rate hike following a decision by the Reserve Bank of Australia (RBA) on February 4, 2026. The RBA’s monetary policy board announced a 25 basis points increase, elevating the official cash rate to 3.85%. This marks the first interest rate rise in over two years.

RBA Decision and Economic Context

The unanimous decision to increase interest rates aims to address rising inflation, a concern for the Australian economy. RBA Governor Michele Bullock responded to the increase by acknowledging the pain it may cause borrowers. However, she emphasized that the economy is recovering and the labor market remains robust.

RBA cash rate increased to 3.85%
First rate hike in over two years
Expectations of a potential second rate increase

Importance of Returning to Economic Balance

Governor Bullock noted the importance of returning to economic and labor market balance. According to her, the current rate increase is justified, despite potential challenges for borrowers. She highlighted that many positive economic indicators, such as strong domestic demand, are encouraging.

Potential Impact on Borrowers

The big four banks—ANZ, NAB, Westpac, and the Commonwealth Bank—are set to pass the full increase on to their customers. Borrowers should prepare for higher monthly repayments and adjust their financial plans accordingly.

Next Steps for the Public and Policymakers

As these financial adjustments unfold, consumers will need to monitor the implications of higher interest rates on their budgets. Economists anticipate that maintaining a balance while addressing inflation remains crucial for Australia’s economic stability.

On a broader scale, policymakers are urged to consider the benefits of a stable economic environment that supports growth while managing inflation effectively. With 2026 already presenting economic challenges, ongoing discussions regarding fiscal strategies will be critical as events unfold.