On a Tuesday in early February, the Reserve Bank of Australia chose to lift its interest rate, making it the first major central bank to tighten policy in 2026. It is the kind of quiet turn that marks a moment of divergence, when one institution moves while others wait and watch. Within a day, a senior economist at Westpac was already musing that this first step might be followed by another as early as March, though most of the market still expects the next move to wait for the first-quarter inflation figures in May.
RBA May Face Second Rate Hike as Early as March, Westpac's Ellis Warns
The first major central bank to tighten in 2026 may not be done
On a Tuesday in early February, the Reserve Bank of Australia chose to lift its interest rate, making it the first major central bank to tighten policy in 2026. It is the kind of quiet turn that marks a moment of divergence, when one institution moves while others wait and watch. Within a day, a senior economist at Westpac was already musing that this first step might be followed by another as early as March, though most of the market still expects the next move to wait for the first-quarter inflation figures in May.
On Tuesday, the Reserve Bank of Australia raised interest rates, becoming the first major central bank to tighten policy in 2026. The move leaves the RBA out in front of its peers, and every subsequent decision it makes will be read as a signal for the others.
Within a day, Luci Ellis, chief economist at Westpac Banking Corp., was suggesting the bank might not stop there. She sees a second consecutive increase as possible as early as March, a faster cycle than many had assumed.
The prevailing view among traders and economists, however, points to May. That meeting would come after first-quarter inflation data is released, giving the board a fresh reading on prices before it decides whether to act again. A March move would mean acting before that data arrives, and would have to clear a high hurdle.
The reporting does not spell out the reasoning behind Ellis's scenario or the conditions that would justify such a quick move. What is clear is the sequence: a hike on Tuesday, a base case of May, and a warning that March remains a live possibility. The first-quarter inflation figures, and any signals from the RBA before March, will show which path it takes.
On Tuesday, the Reserve Bank of Australia raised interest rates, and in doing so became the first major central bank to tighten policy in 2026. Within a day, one of the country's most closely watched economists was suggesting the move might not be a one-off.
Luci Ellis, chief economist at Westpac Banking Corp., says the RBA could be pushed into a second consecutive increase as early as March. That would make the central bank's first tightening cycle of the year, the first anywhere among the major monetary authorities, a faster one than many had assumed.
The Tuesday decision itself was the news. No other major central bank has raised rates so far this year, which leaves the RBA out in front of its peers and turns its next steps into a reference point for markets watching to see who might follow.
The prevailing expectation among traders and economists is for a follow-up hike at the bank's May meeting. That timing matters because it comes after the release of first-quarter inflation data, which would give the board a fresh reading on prices before it decides whether to go again.
Ellis's warning cuts against that schedule. Moving in March would mean acting before that data arrives, and for most bank-watchers, a move that soon would have to clear a high hurdle. In other words, her scenario is a possibility rather than the consensus view, and it sits ahead of where most of the market currently places the next increase.
The source reporting does not lay out the specific reasoning behind Ellis's March scenario, nor does it say what conditions would have to be met for the board to move that quickly. What it establishes is the sequence: a hike on Tuesday, a market base case of May, and a senior bank economist flagging March as a live risk.
What to watch is the first-quarter inflation data, which anchors the May expectation, and any signals from the RBA between now and its March meeting about whether it sees a reason to move before that data arrives.
Citazioni salienti
The RBA may be forced to raise rates for a second consecutive time in March (paraphrase).— Luci Ellis, chief economist, Westpac Banking Corp.
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