News & Insights

As 2026 unfolds, the Reserve Bank of Australia (RBA) has reasserted its grip on the macroeconomic narrative. A 25 basis point hike in February – lifting the cash rate to 3.85% – marked a sharp reversal in policy expectations. Just months earlier, markets had been pricing in rate cuts. Now, further hikes are on the table, driven by persistent inflation and stronger-than-expected private demand combined with significant and sustained public sector demand.

2025 was a mixed year in Australia. The ASX200 delivered 10.3% despite moments of elevated volatility in April and November. On a macro level, there are signs of green shoots and an uptick in growth but off a very low base. In the post-COVID years it has been an economy reliant on government spending with the public purse propping up growth. In fact, without the spending of government in 2024 Australia would’ve been in recession as the private economy faltered. The good news is in 2025 GDP growth accelerated on the back of the private sector returning to life.