News
Wealth Pi Fortnightly Economic Snapshot
Interest Rates
On the 3rd of February the RBA increased the official cash rate by 0.25%. The current official cash rate as determined by the Reserve Bank of Australia (RBA) is 3.85%. The next RBA Board meeting and Official Cash Rate announcement will be on the 17th March 2026.
As at the 13th of February, the ASX 30 Day Interbank Cash Rate Futures March 2026 contract was trading at 96.14, indicating a 9% expectation of an interest rate increase to 4.10% at the next RBA Board meeting.
RBA
According to the Statement on Monetary Policy – February 2026, cash rate reductions over the past year have eased financial conditions by lowering lending rates and supporting a pick-up in credit growth. Some indicators suggest conditions may now be moderately accommodative, including above-average credit growth, rising household and business leverage ratios, low risk premia and the cash rate sitting below certain estimates of the neutral rate. However, other measures point to financial conditions remaining somewhat restrictive, as the cash rate is above alternative neutral rate estimates, mortgage payments remain elevated relative to historical averages and household savings are still relatively high. The February Statement also notes that market expectations for the cash rate have shifted higher since November, with pricing implying around two rate rises this year in response to stronger-than-expected labour market and inflation data as well as recent RBA communications. Almost all market economists expected a rate rise at the February meeting, with roughly half anticipating a further increase by September.
Australian Markets
Australian market conditions remain resilient but increasingly pressured. The RBA has lifted the cash rate by 25 basis points to 3.85 per cent in response to inflation reaccelerating in the second half of 2025, with capacity pressures emerging as demand momentum strengthens. Private demand has outperformed expectations, supported by household spending and investment, while housing activity and prices continue to firm. Financial conditions eased over 2025 and credit remains readily available, although it is unclear whether conditions are still restrictive. At the same time, labour market conditions remain tight, with unemployment lower than expected, underutilisation low and unit labour cost growth elevated. Broader wage measures remain firm despite some moderation in the Wage Price Index.
While global uncertainty persists, Australia has seen limited adverse spillovers, with major trading partners experiencing stronger-than-expected growth. Overall, the environment reflects solid domestic demand, persistent inflationary pressures and a policy stance that remains sensitive to evolving capacity constraints.
Global Markets
According to the IMF’s World Economic Outlook Update – January 2026, global growth is projected to remain steady at around 3.3 per cent in 2026 and 3.2 per cent in 2027, broadly in line with 2025 outcomes and slightly revised upward from October. Growth is being supported by resilient demand, technology-related investment and accommodative financial conditions, although momentum varies across regions. Advanced economies are expected to expand modestly, while emerging markets continue to grow above 4 per cent. Global inflation is forecast to decline further to 3.8 per cent in 2026 and 3.4 per cent in 2027, though progress differs across economies. Risks remain tilted to the downside, including trade tensions, policy uncertainty, fiscal pressures and potential financial market volatility.
Property
Confidence in Australia’s housing market remains strong entering 2026, with 87% of industry respondents expecting dwelling values to rise over the year ahead and only 3.5% anticipating declines. National home values increased 8.6% over 2025, although momentum moderated late in the year as affordability pressures and interest rate expectations intensified. Sentiment is increasingly divergent across states: Queensland, Western Australia and South Australia are viewed as the most bullish markets, supported by affordability, migration and tight supply, while New South Wales faces more rate-sensitive growth due to stretched serviceability and Victoria continues to lag amid higher property taxes, weaker population flows and significant investor selling. The expansion of the First Home Guarantee has lifted activity, though affordability constraints remain binding, and while risks are building, limited new supply is expected to help underpin prices in 2026 (Cotality).
Disclaimer
Information contained herein has been prepared by Wealth Pi Fund Pty Ltd for the purpose of information only. It does not constitute an offer for sale, or solicitation for the purchase, of securities, units or other investments. It is intended as a general guide only. This information does not constitute personal advice and has been prepared without taking into account your objectives, financial situation or needs. You should consider these matters before acting on the information. You need to consider the Information Memorandum (IM) for a product, which are only available for eligible investors, before making a decision whether to acquire or hold interests. All views expressed in this document are those of Wealth Pi Fund and should not be construed as an offer or recommendation at any time. Wealth Pi Fund recommends investors seek professional advice before making any investment. Past performance of any product described on this site is not a reliable indication of future performance. Wealth Pi Fund has taken care to ensure all content within this document is accurate, however Wealth Pi Fund (or any other company or associated entity) does not make any representation or warranty that such information is accurate or complete, nor do they accept any liability for harm, loss, costs, or damage arising from the use or reliance on the information. Any investor must satisfy itself by its own investigation and by undertaking all necessary searches and enquiries as to the accuracy and comprehensiveness of all information contained within this document or otherwise made available to it by any one of the entities.
