RBA Signals Uncertainty on Rate Path After 25bps Hike to 3.85%

SYDNEY, February 17, 2026 - The Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points to 3.85% after reversing three 2025 cuts, citing persistent inflation risks. Minutes from the February 16 meeting showed unanimous agreement that without further tightening, inflation would remain above target. The RBA sees risks on both sides and will rely on incoming data, including Q1 CPI due April 28, with core inflation expected near 3.4%. Markets price a 25bps hike to 4.10% at the May meeting. The labor market remains solid at 4.1% unemployment, while house prices and lending have surged. A stronger AUD could tighten conditions but reflects rate hike expectations.