This article has been translated from English to Gen Z Slang.
The Reserve Bank of Australia (RBA) just pulled a wild card by dropping its first interest rate banger since November 2023, bumping the cash rate up by 25 basis points to a lit 3.85%. The squad was all in on this, showing they're low-key stressed about that inflation life.
This move flipped the script hard from its chill August 2025 rate cut. The Board was basically like, “lol nope, this rate ain't gonna cut it to reel in inflation goals anytime soon.”
The central squad was like, “Yo, inflation was on beast mode in the second half of 2025,” fueled by private demand going off the charts and everything being mad tight capacity-wise. 📈🔥
Key Takeaways
- The RBA hiked its cash rate to 3.85%, reversing one of those chill three cuts from 2025, making it the first big bank universally flipping from being generous to clamping down
- Inflation spiked hardcore during the second half of 2025, with peeps buying and investing like crazy and more stress on the supply than they guessed before
- Governor Michele Bullock said the economy is tight like a snazzy fit, and inflation's gonna stay above the 2-3% zone for a hot minute, though she didn’t totally swear on more hikes just yet
- New predictions got the cash rate climbing to 3.9% by June and 4.2% by December, hinting at like two more hikes incoming in 2026
Check out the Reserve Bank of Australia's Monetary Policy Statement (January 2026)
During her presser, Boss Lady Bullock noted borrowers were gonna be “down in the dumps” but warned keeping inflation high would be even worse vibes. She supported the August chill move, noting everything switched up big time since mid-2025 when demand dipped and inflation seemed to be playing it safe.
Bullock emphasized the RBA's strat hasn’t totally done a 180—the squad's still trying to cool down inflation while keeping those job stats vibing—but stressed things are “a bit tighter than we thought.” 😬
Catch RBA Gov. Bullock’s Press Conference (January 2026)
The new Statement on Monetary Policy spilled the tea on more wild inflation forecasts, with core inflation expected to hit 3.2% by end-2026, up from the earlier chill 2.7% prediction, and not coming down to the casual 2.5% until mid-2028.
This gnarly revision happened despite expecting more rate hikes, highlighting the squad's real worries about inflation vibes.
Market Reactions
Australian Dollar vs. Major Currencies: 5-min
Overlay of AUD vs. Major Currencies Chart Faster with TradingView
The squad being unanimous with no one saying “nah” made everyone think the RBA is dead serious about taming inflation, even if that means the rents go up for the homies.
Swaps markets did a swift U-turn, ditching the whole ‘more ease please’ for a two-thirds vibe of another hike by June and maybe another one by August.
The Aussie lost some of its sick gains like 30 minutes after the drop and dipped briefly after the Gov's presser. Still, the comdoll found its balance and chilled above pre-event levels as the party moved to the London session. 🌍
Wanna dive into basic analysis-madesimple and blend it with some tech analysis to spot top-notch trading ops that fit your trading and chill style? Peep our Premium membership for event trading guides, quick plays, weekly chill recaps, and more!
Babypips.com’s Premium Members score an exclusive 30% cut on the annual plan for the first year with Tradezella—the chillest journaling app out there! ($120 saved!) More deets here!
