Westpac Forecasts RBA Cash Rate to Reach 4.85% by August 2026

Westpac has revised its cash rate forecast, predicting that the Reserve Bank of Australia (RBA) will implement three additional 0.25 percentage point increases in May, June, and August 2026. This would elevate the cash rate to 4.85%, a level not observed since November 2008 during the Global Financial Crisis.

The bank attributes this projection to ongoing disruptions in fuel supply and the accelerated pass-through of costs to goods and services, despite the temporary halving of the fuel excise.

According to Canstar.com.au, if these rate hikes materialize, monthly repayments on a $600,000 loan with 25 years remaining would increase by approximately $276. Including the two hikes already implemented this year, total monthly repayments could rise by $457 by August.

Sally Tindall, Canstar's data insights director, commented on the forecast: "Borrowers could be in for a tough couple of years if Westpac's forecast for three further hikes and no rate cuts till 2028 comes to pass."

She advised borrowers to prepare their finances and consider negotiating with their banks for better rates, emphasizing that loyalty does not always result in financial benefits.

The RBA has already raised the cash rate to 4.10% in March 2026, citing concerns over inflation and global economic conditions.

Homeowners are encouraged to assess their financial situations and explore options to mitigate the impact of potential rate increases.