RBA Interest Rate Decisions and Impact💱 Forex•AUD/USD

RBA Hikes Rates to 3.85%, Signals Further Tightening

February 3, 2026, 12:01 PM154 words10 sourcesAI-Generated · Reviewed by editorial team
AUD/USD
RBA Hikes Rates to 3.85%, Signals Further Tightening

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The Reserve Bank of Australia (RBA) unanimously increased the cash rate by 25 basis points to 3.85%, citing persistent inflationary pressures and a stronger-than-expected economy. Governor Bullock emphasized the need to address the strong inflation pulse, indicating a willingness to accelerate tightening if underlying factors prove more resilient. The RBA upgraded its inflation forecasts and, surprisingly, signaled potential further tightening into 2026, despite anticipating slower growth beyond 2027. Near-term growth forecasts were revised upwards due to robust household and business investment, particularly in data centers. The Australian Dollar (AUD) strengthened against the Japanese Yen, New Zealand Dollar, and USD following the hawkish decision and guidance. Market pricing now reflects approximately 41 basis points of further rate hikes. While the US Dollar experienced some calm amid a partial shutdown, broader economic data and geopolitical factors continue to influence currency movements. The RBA’s move contrasts with global easing trends, marking a potential shift in monetary policy.

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