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RBA Rate Path 2026: Forecasts and Hedging Strategies

Economists' views on the RBA cash rate path in 2026 and strategies like rate splitting and offset accounts to manage rate risk.

Editorial · September 7, 2026

What Economists Expect for the RBA Cash Rate in 2026

Economists’ forecasts for the RBA cash rate in 2026 vary. Some predict the cash rate will remain on hold at 4.35% for an extended period, while others expect a cut to 3.85% by mid-2026. A third group anticipates a rise to 4.60% if inflation proves sticky.

These divergent views reflect uncertainty about inflation and economic growth. The RBA’s own projections suggest inflation will return to the 2-3% target band only by late 2026, which could delay any easing.

How to Manage Interest Rate Risk: Fixed Rate Splitting and Offset Accounts

Given the uncertain path, borrowers can adopt strategies to manage the risk of rate changes.

Reserve Bank of Australia building in Sydney

  • Fixed rate splitting: Splitting a loan into fixed and variable portions can provide a hedge. A fixed portion locks in a rate for a set term, while the variable portion retains flexibility, such as making extra repayments or using an offset account. The fixed portion protects against rate rises, while the variable portion benefits if rates fall.
  • Offset accounts: An offset account is a transaction account linked to a variable-rate loan. The balance in the offset account is deducted from the loan principal when interest is calculated, reducing the interest charged. If rates rise, the interest saved increases, offsetting some of the higher loan costs. However, offset accounts generally only apply to variable-rate loans, so they are not useful for fixed portions.

Choosing a Strategy for Your Circumstances

The choice between fixed, variable, or a split depends on your financial situation and risk appetite. A split might suit those who want a balance of certainty and flexibility. A variable rate with an offset account might suit those who want to maximise interest savings and have a lump sum available.

Consulting a mortgage broker can help you compare options from multiple lenders and decide on the structure that best aligns with your goals. Remember that any strategy should be based on your own needs, and that rates and conditions may change.