MNI RBA Preview-Feb 2026: +25bps Likely, Focus On Outlook

EXECUTIVE SUMMARY: 

• The combination of a resilient labour market and stronger than expected Dec/Q4 inflation has the sell-side consensus expecting an RBA rate hike tomorrow. If delivered, focus will be on how much follow up action the central bank sees as needed to ensure inflation returns to target. The trimmed mean CPI y/y has been trending up since mid last year and is now comfortably above the top end of the RBA's 2-3% target band. We expect the RBA to leave the door ajar for another hike, albeit one that remains dependent on data outcomes. 
• OIS now reflects materially tighter policy expectations across the curve. A 25bp hike tomorrow is priced at a 77% probability (up from 32% pre-jobs data), with cumulative tightening probability of 166% by June (vs 88% pre-jobs) and 229% by December 2026 (vs 152% pre-jobs).

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK:RBA Preview - Feb 2026.pdf