Key takeaways
The RBA cash rate currently sits at 4.35% following the May 2026 rate increase.
Major bank economists are divided on whether the RBA will pause or continue tightening in June.
Inflation, wages growth and consumer spending remain key factors influencing the next RBA decision.
Reviewing your home loan now may help you prepare for future rate changes.
Following the May 2026 increase, the RBA cash rate now sits at 4.35%, with attention turning to the Reserve Bank’s June meeting as policymakers continue monitoring inflation, employment and economic activity.
After several rate increases early this year, many households are continuing to adjust to higher borrowing costs and broader cost of living pressures.
Economists remain divided on what could happen next. Some believe the RBA may pause to assess how previous increases are flowing through the economy, while others say inflation risks could still justify another move.
What is the RBA cash rate?
The RBA cash rate is the interest rate set by the Reserve Bank of Australia for overnight loans between banks. It influences the cost of borrowing across the economy, including many variable home loans and savings products.
When the cash rate moves, lenders review their own interest rates. However, each lender makes independent decisions about if, when and how much they adjust.
What are economists predicting for June?
Economists remain closely focused on inflation data, labour market conditions, and consumer spending ahead of the June meeting.
Commonwealth Bank economists expect the RBA to pause in June following May’s increase, while continuing to monitor whether inflation is easing sustainably.
National Australia Bank has indicated the RBA may remain cautious, given inflation is still above the central bank’s target range.
Westpac economists expect the RBA may increase rates again in June as inflation pressures remain elevated, and the Bank continues monitoring how higher costs are flowing through the economy.
Independent economist Saul Eslake believes the RBA is likely to hold in June after lifting rates three times earlier this year.
“They've raised rates three times. They've taken back all that they gave last year,” Eslake said.
“The language in the minutes suggests that they now think they can afford to wait and see what impact the fuel crisis and those sorts of things have on inflation and economic activity.”
Eslake also pointed to softer labour market data as another reason the RBA may pause.
“Employment fell by almost 19,000 and the unemployment rate went up to 4.5%,” he said.
“Maybe the fuel crisis, or the increases in interest rates in the early part of this year, are having a quicker or bigger dampening impact on the economy than they'd anticipated.”
These forecasts highlight how closely balanced the June decision may be, particularly as the RBA weighs inflation risks against slowing household spending and broader economic conditions.
What borrowers are seeing right now
Borrowers are continuing to reassess budgets, borrowing capacity and loan structures as interest rates remain elevated.
Aussie Broker, Rod Peirce, said many borrowers are taking a more cautious and measured approach while waiting for certainty around rates and the broader economy.
“There is a slowdown happening, and we still haven't seen all the geopolitical impacts yet,” Peirce said.
“Unemployment is starting to rise, and that's a lead indicator of pressure for small to medium enterprises and employees.”
Peirce said many households are now thinking quarter by quarter rather than making long-term assumptions about where rates may head next.
Many borrowers are also reviewing whether fixed, variable or split loan options may suit their circumstances as rate uncertainty continues.
Higher interest rates can also affect borrowing capacity, which could influence how much buyers are able to borrow and the types of properties they consider.
You might also be interested in: What is a serviceability buffer and how does it affect your home loan?
What a June rate decision could mean for borrowers
If the RBA holds
A pause could provide some short-term stability for households after multiple rate increases earlier in the year.
However, lenders make independent pricing decisions, meaning home loan rates can still change even if the RBA leaves the cash rate unchanged.
Eslake said while another increase later this year remains possible, June may be too soon for the RBA to move again.
“I think they've got good reason to sit this one out and wait until they get the June quarter CPI data,” he said.
“I would say the August meeting is live. Depending on what that data says, there could be an increase in rates again at the August meeting.”
If the RBA hikes again
Another increase could place additional pressure on borrowers already managing higher mortgage repayments and living costs.
Even relatively small changes in interest rates can affect both repayments and borrowing capacity. Higher rates may also lead some buyers to reconsider budgets, property types, or preferred locations.
If the RBA cuts later in 2026
Should inflation ease sustainably, rate reductions later in 2026 may be possible. Whether and how much lenders pass on would vary.
Wondering whether interest rates could rise again this year and what that might mean for you? Read our guide on whether interest rates will rise and what you can do to prepare.
Banks may not pass on future RBA moves in full
Even when the RBA adjusts the cash rate, lenders are not required to pass on the full change. Some may move earlier, later, by a smaller amount or by more than the RBA change.
If you’re unsure how any move applies to you, reviewing your loan can bring clarity.
You might also be interested in: Which banks have passed on the RBA’s latest interest rate?
What it means for savers
Rate decisions don’t just affect borrowers.
If rates rise, savings accounts and term deposits may see improved returns, although not all providers move at the same speed or by the same amount.
If rates hold or fall, savers may see returns stabilise or ease. It can be worth reviewing whether your savings structure still suits your goals.
Balancing debt management and savings strategy becomes increasingly important during periods of rate uncertainty.
Cost of living pressures remain in focus
Higher interest rates can flow through to mortgage repayments, rents and business costs. For many households, that adds to existing cost of living pressures.
Even small rate movements can make a difference. Reviewing your loan structure, repayment strategy and household budget can help you stay prepared.
In some cases, borrowers may also look at strategies like debt consolidation to help manage repayments. This involves combining multiple debts into a single loan, which may reduce overall monthly repayments depending on the structure and interest rate.
You can learn more about how this works in our guide to debt consolidation.
What the next RBA decision could mean for you
While economists debate the next move, it can help to think about what different outcomes could mean for your own plans.
If the RBA… | What you might want to think about |
|---|---|
Raises rates | • Review your borrowing power. Higher rates can reduce how much you can borrow. |
Holds rates | • A pause can be a good time to review your loan and borrowing capacity. |
Cuts rates | • Lower rates could increase borrowing power and reduce repayments. |
If you’re unsure what the next RBA move could mean for your situation, an Aussie Broker can help you review your options and plan your next step.
Tips to prepare for possible rate changes
• Review your current rate and repayment amount
• Check when you last refinanced or negotiated with your lender
• Build or maintain a buffer where possible
• Consider whether fixed, variable or split options suit your situation
• Talk to an Aussie Broker if you’re unsure what’s right for you
With over 1,000 Aussie Brokers across 200+ stores, we can help you understand your options and feel confident about your next step.
Need help reviewing your home loan?
If you’re unsure how a rate hold, hike or future cut could affect you, an Aussie Broker can help you understand your options.
We’ll look at your current rate, loan structure and goals, and help you decide whether refinancing, restructuring or staying put makes sense for your situation.
You can get in touch online, over the phone, or by visiting an Aussie store near you.
Book a free^ chat with an Aussie Broker to review your current loan and explore your options.