RBA Rate Decision: December 8, 2026

December’s meeting is the eighth and final Monetary Policy Board decision of 2026. It comes without a quarterly Statement on Monetary Policy (the November meeting carries the SMP), making it a shorter, more focused decision. By December, the Board will have a comprehensive picture of how Australian economic conditions have evolved across the full year: whether the three hikes of early 2026 have succeeded in bringing inflation back toward the 2-3% target band, and whether further tightening is required or whether the cycle has peaked.

The current cash rate of 4.35% matches the peak reached in late 2023, before the RBA began cutting in February 2025. The three hikes of 2026 (February, March, and May) were driven by a re-acceleration of underlying inflation, a persistently tight labour market, and rising energy and food prices linked to the Middle East conflict. All three cuts of 2025 have now been fully reversed. Markets have been pricing approximately one additional 25 basis point hike to 4.60% by year-end, though the timing has remained uncertain.

The December decision will be announced at 2:30 pm AEST on Tuesday, 8 December 2026, followed by a press conference at 3:30 pm AEST.

What to Expect

By December 2026, the RBA will have assessed several months of additional inflation data. The key question is whether underlying inflation has moderated sufficiently to justify a pause, or whether it remains stubbornly elevated, warranting a further hike to 4.60%. The RBA’s trimmed mean inflation measure, published by the Australian Bureau of Statistics (ABS) with each quarterly CPI release, is the Board’s preferred gauge of underlying price pressures, stripping out volatile items such as fuel and fresh produce.

The Australian labour market has remained remarkably resilient through 2026’s hiking cycle. Unemployment has stayed near multi-decade lows, and wage growth has remained above levels consistent with the 2-3% inflation target over a sustained period. A persistent mismatch between labour demand and supply contributes to services inflation, which the RBA has flagged as a structural concern.

Global factors will also weigh on the December decision. Conditions in China, Australia’s largest trading partner, are critical to commodity export revenues and domestic economic confidence. The trajectory of US Federal Reserve policy and global financial conditions will influence the Australian dollar and imported inflation. By December, the Board will have the benefit of several additional data points on global growth, trade, and commodity prices.

If inflation data between August and November 2026 shows a sustained return toward the target band, the Board may signal that the hiking cycle has peaked and that the next move could eventually be a cut. If inflation proves more persistent, a hike in December to 4.60% remains possible. The RBA’s communication leading into the December meeting, including any public speeches by the Governor or Deputy Governor, will be closely monitored for signals.

Cash Rate Decision History

Market Impact Scenarios

• Hold at 4.35% (base case) – If underlying inflation is tracking back toward the 2-3% band, a hold is the most likely outcome. The Australian dollar (AUD) would hold steady against major currencies. Australian government bond yields would see limited movement. The ASX 200 would likely react positively to confirmation that the hiking cycle has peaked, with rate-sensitive sectors including property and financials outperforming. The Board’s statement would focus on when, not whether, the next move might be a cut.
• Hike 25bp to 4.60% – A hike in December would signal that the Board views inflation as not yet sufficiently tamed. The AUD would strengthen against the US dollar and euro. Bond yields would rise. The ASX 200 would likely fall, with mortgage-sensitive sectors including banks and residential property under pressure. Australian households carry high levels of variable-rate debt, making further hikes particularly sensitive for consumer confidence.
• Cut 25bp to 4.10% – A cut at the December meeting would be a significant surprise and would require a sharp moderation in both headline and underlying inflation to well within the target band. The AUD would weaken sharply. Bond prices would rally. Such a move is unlikely given the recent hiking cycle but cannot be entirely excluded if growth slows sharply through the second half of 2026.

Statement and Press Conference

Following the 2:30 pm AEST announcement, RBA Governor Michele Bullock will hold a press conference at 3:30 pm AEST to explain the Board’s decision and answer media questions. The post-decision statement will be scrutinised for any change in language about the Board’s assessment of inflation risks and the future path of the cash rate. As a non-SMP meeting, the statement will be shorter than the quarterly reports but still provides the primary communication channel for the Board’s current thinking.

The minutes of the December meeting will be published two weeks after the decision. They provide a more detailed account of the Board’s deliberations and are used by economists and market participants to assess the distribution of views within the Board. Any shift toward a more dovish tone in the minutes, or a reduction in the number of members favouring further hikes, would be taken as a signal that the tightening cycle has run its course.

Related Events

• FOMC Rate Decision December 2026 – The US Federal Reserve’s December decision, which will influence global monetary conditions and the AUD/USD rate ahead of the RBA’s announcement.
• ECB Rate Decision December 2026 – The European Central Bank’s December decision, providing broader context for global monetary policy heading into year-end 2026.
• Bank of England MPC Rate Decision December 2026 – The BoE’s December decision on 17 December, another major central bank decision in the same month.

Frequently Asked Questions

What is the RBA’s inflation target and how does the cash rate affect it?

The Reserve Bank of Australia targets CPI inflation of 2-3% on average over the medium term. The cash rate target is the primary monetary policy tool: raising rates increases borrowing costs, dampening spending and investment, which in turn reduces inflationary pressure. Cutting rates does the opposite. The trimmed mean CPI, which strips out the most volatile price movements, is the Board’s preferred underlying inflation gauge.

When will the December 2026 RBA decision be announced?

The decision will be published at 2:30 pm AEST (3:30 am GMT) on Tuesday, 8 December 2026, following a two-day Monetary Policy Board meeting on 7-8 December. The Governor’s press conference follows at 3:30 pm AEST.

How does the RBA cash rate affect Australian mortgages?

The RBA cash rate directly influences variable-rate mortgage rates offered by Australian banks. Australia has a high proportion of variable-rate and short-fixed-term mortgages relative to other developed economies, meaning rate changes flow through quickly to household budgets. A 25 basis point increase in the cash rate typically adds approximately A$75-100 per month to repayments on a A$500,000 variable mortgage. Rate-sensitive property markets, particularly Sydney and Melbourne, watch RBA decisions closely.

Featured image: Photo by Fabian Mardi on Unsplash.