RBA interest rates: Hold widely tipped for Tuesday amid fierce debate over next move

Families with mortgage relief on their Christmas wish-list will almost certainly be left disappointed on Tuesday with Reserve Bank boss Michele Bullock to signal whether a dreaded hike looms in the new year.

The official interest rate is widely tipped to remain at 3.6 per cent following the RBA’s final board meeting of 2025.

Financial markets expect a rate rise late in 2026 thanks to growing cost of living pressure. Core inflation — which strips out volatility — hit 3.3 per cent for the year to October, above the RBA’s target.

Yet there’s fierce debate as to whether that’s too pessimistic.

HSBC economist Paul Bloxham on Monday said “there is a reasonable argument that the RBA has cut too far already”.

But he warned that reversing course would possibly damage the central bank’s credibility.

AMP’s Diana Mousina said “talk of RBA rate hikes is premature”.

She said the board would not be in a rush to move in either direction, and there was reason to be concerned about weakness from flat-lining job ads and cost-conscious consumers.

It comes as new data from ratings agency Equifax showed more than half the households across the country posted an improved credit score through the past year — while 23 per cent went backwards.

That shows lower interest rates and easing inflation have been good news for borrowers.

“Combined with credit delinquencies remaining stable in the third quarter of this year, these are encouraging signs,” Equifax Australian chief Melanie Cochrane said.

“With cost-of-living pressures, maintaining good credit health can be challenging, but building financial resilience means that Australians are protecting their credit scores and therefore enabling their access to credit when they need it most.”