PREDICTION ONE: Rate cuts in 2026 now less likely as inflation persists Expectations of interest rate relief in 2026 are fading as inflation continues to prove more persistent than previously hoped. Earlier confidence in a smooth return to target has given way to the reality that price pressures are easing slowly and unevenly. While a rate cut remains possible next year, the likelihood has diminished, with any move more likely in the second half of 2026 at the earliest. The challenge lies not in individual data points but in the broader inflation pattern. Goods inflation has moderated, but services inflation remains stubborn, particularly in property-related areas such as rents, utilities and insurance. These labourintensive categories unwind gradually and are less responsive to interest rates, making them a key concern for the Reserve Bank. For property, persistent rental inflation reflects ongoing supply shortages, while high construction and maintenance costs continue to delay new housing delivery. Although parts of the economy are slowing, this has not yet been enough to offset inflation risks. As a result, the most likely scenario is an extended period of steady rates, with borrowing costs remaining elevated through much of 2026 and any meaningful relief delayed until late in the year. Australia inflation and RBA cash rate Official cash rate Vs inflation 2026 PROPERTY OUTLOOK
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