RBA September Rate Rise Looks Like a 'Done Deal'
Senior RBA officials signal rates must climb further as persistent Middle East inflation and AI-driven price pressures change the calculus.
ABC News reports that senior RBA officials have all but confirmed a rate rise at the board's September 28–29 meeting, after Governor Michele Bullock, Deputy Governor Andrew Hauser, and assistant governors Sarah Hunter and Brad Jones appeared before the federal parliament's Standing Committee on Economics on Friday 18 September.
Financial markets are now pricing in a 95 per cent chance of a rate rise, according to LSEG data cited by ABC News. If the hike proceeds, the cash rate — currently sitting at 4.35 per cent — would move to 4.60 per cent. The RBA has already raised rates three times in 2026.
What RBA Officials Actually Said
Deputy Governor Andrew Hauser delivered the week's most significant signal when he argued that interest rates are not abnormally high — they are returning to something approaching normal.
He backed the view expressed by leading US economist Kenneth Rogoff that the near-zero rate environment between the global financial crisis and COVID-19 was an anomaly, not the baseline. In Hauser's own words: "I think my personal view — as a personal view — is that we're probably rather closer now to a more sensible level of long-term global real interest rates than we were a year or two ago."
For Australian borrowers, this is a significant reframing. It suggests that the RBA is not simply waiting for inflation to fall so it can return rates to a comfortable low — it is recalibrating what normal looks like for the long term.
Governor Michele Bullock explained why the RBA's willingness to "look through" supply shocks is wearing thin. Two upside risks are driving this: the ongoing conflict in the Middle East, which is keeping oil and shipping costs elevated, and the global AI boom, which is generating demand in supply-constrained sectors.
"There's much more of an inclination [from businesses] to think that we need to pass through these cost increases because it's going to be much more persistent," Bullock said. She went further: "I think we have to acknowledge that the trade-off has got worse, that this particular Middle East shock has made us poorer, and we can't respond to that by letting inflation get out of control."
What Economists Are Now Forecasting
The weight of expert opinion shifted firmly toward a September hike following the hearing.
Robert Thompson, RBC's head of economics and rates strategy, had previously expected a November move but revised to September after the testimony. He now sees the peak cash rate reaching 4.85 per cent — the highest since before rates were cut in the wake of the 2008 financial crisis. "September now seems all but a lock, with November becoming the more contentious decision-point. On the other side of the cycle, we keep a first cut in November 2027," Thompson wrote.
Marcel Thieliant from Capital Economics agrees a September hike "now looks like a done deal", but does not expect the RBA to tighten further after that, arguing policy is already "quite restrictive" and the bank will be wary of causing a sharp rise in unemployment.
Luci Ellis, former RBA assistant governor and now Westpac chief economist, captured the prevailing mood plainly: "You can see that they're trying to signal to the market that they want to raise rates. So September is a genuine possibility as well."
July's consumer price index reinforced the concern: headline CPI printed at 3.5 per cent and trimmed mean at 3.6 per cent — still above the RBA's 2–3 per cent target band and insufficient to give the board confidence that inflation is sustainably returning to target.
What This Means for Your Home Loan
If the RBA hikes on 29 September, it will be the fourth increase in 2026. Variable-rate borrowers will see their repayments rise again within weeks of the decision. But Deputy Governor Hauser's remarks about rates returning to a "more sensible level" are the more consequential signal for anyone planning further ahead.
If senior RBA officials genuinely believe rates around current levels represent the new equilibrium, borrowers who are mentally waiting for a return to the low-rate environment of 2020–21 may be waiting for something that is no longer on the table.
Three actions are worth taking now, before the September 29 decision:
**1. Check how your rate compares.** Multiple rate rises this year mean many variable-rate borrowers are now paying significantly above the market's most competitive products. See what the cheapest home loans currently offer and whether a better deal is available.
**2. Model the higher-rate scenarios.** A cash rate of 4.60 or even 4.85 per cent changes borrowing capacity materially. Use the borrowing power calculator to see how your position shifts under either scenario.
**3. Quantify what a refinance could save you.** If you have not reviewed your home loan in the past six months, a refinance is worth modelling. The refinance savings calculator gives you a quick read on whether switching makes financial sense right now.
The RBA board meets on 28–29 September. Whatever the outcome, the message from Friday's parliamentary testimony is unambiguous: do not assume rate relief is coming soon, and plan your finances accordingly.
ABC News reports on the full hearing including statements from all four RBA officials who appeared before the Standing Committee on Economics.